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Irish funds drop 4% in November

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  • Irish funds drop 4% in November

IRELAND - Irish managed pension funds fell 4% in November although there were signs of some stability towards the end of the month, Hewitt Associates has claimed.

Figures from the monthly Hewitt Managed Fund Index revealed the return for the year-to-date is -32%, while the result for the 12 months to the end of November was -32.7%, compared to -32.9% for the year to October 2008.

The index, which is an indicator of the performance of Irish managed pension funds, revealed pension funds had a poor start in November as world equity markets declined 6.4% in euro terms, and Irish stocks dropped 16.2% following the domestic banking crisis.

Hewitt also revealed the index reported a negative return of 4% in November, although it highlighted "some signs of stability" following an equity market rally on the back of "globally co-ordinated stimulus packages announced by the governments of the United States, the European Union and China".

"As a consequence of the unprecedented volatility in international equity markets and steep market declines suffered by investors in 2008, equity markets are now appearing to offer reasonable value for long term investors," said Deborah Reidy of Hewitt Associates.

She pointed out: "Equities could certainly fall further over the coming months, but from a long-term perspective they appear relatively attractive. Values are also appearing in the corporate debt market with attractive premiums over government bonds now widely available."

Despite this, however, the managed fund index revealed pension funds are now suffering an average three-year return of -7.7% per annum, although it does at least move into positive territory over a five-year period at 1.3% a year, and widens to 1.5% over 10 years.

The firm noted bond yields continued to fall in November and long-dated fixed interest bonds yields hit 4.1% - a drop of 60 basis points in the month - which Hewitt claimed would place further funding pressure on defined benefit (DB) schemes as the liabilities have increased while investment returns have dropped.

Hewitt's complete pension managed survey will be published later today, however the new figures follow increased concerns about Irish pension funds after the Irish Business and Employers Confederation (IBEC) called on the government to review funding standards to avoid schemes collapsing. (See earlier IPE article: NPRF may be used to shore up Irish banks)

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com

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