IRELAND - Irish pension managed funds returned an average of -9.2% in October, bringing the overall return for the last 12 months to -33.4%, Rubicon Investment Consulting has revealed.

Figures from the firm's monthly survey of group managed funds showed the best performing manager for October was Eagle Star albeit it still delivered a negative return of -8.5%, and Bank of Ireland also outperformed the average with a yield of -8.6%.

In contrast, the worst performing manager of the 10 funds covered by the survey was Irish Life Investment Managers, which had a negative return of -10.5%, while AIB Investment managers followed with a negative return of -10%.

Rubicon revealed in the 10 months of 2008 Irish managed funds have fallen by an average of 29.4%, and over the year to the end of October the pension funds have lost more than a third of their value - 33.4%.

In addition, the figures showed the average managed fund has produced "an extremely disappointing" negative return of -6% per year over the past three years, and although the yield over five years is slightly better at 1.1% per annum, over the last decade the average return is only 1.9% - "well below the Irish inflation rate of 3.8% per annum over the same time horizon".

As a result of the poor medium term returns, Rubicon highlighted only one of the managers surveyed, Merrion Investment Managers, has actually outperformed inflation over the 10-year period with a return of 4%, while KBC Asset Management produced the lowest return of 0.3%.

Interstingly, figures from Hewitt Associates were slightly better and suggested the average return on managed pension funds was as the Hewitt Managed Fund Index- which covers 25 funds - reported an average negative return of -8.5%.

The research by Hewitt estimated the average fall in pension funds for 2008 was -28.9%, while the negative return over the 12 months to the end of October is -32.9% and the average 10-year return is said to be 2.5% per annum, although this is still well below the inflation rate for the period.

Deborah Reidy, spokesperson for Hewitt Associates, claimed the continuing uncertainty in financial markets "is adversely affecting fund performances", as worldwide equity markets are "reeling from a lack of investor confidence and the markets are still struggling to price in the full cost of the anticipated global recession".

She pointed out the returns for October followed "a tumultuous year", but admitted the 10-year return is "quite a worrying figure as the return is now below inflation levels".

"This figure will weigh heavily on the minds of pension fund investors as their investments are now struggling to keep apace with acceptable long term rates," said Reidy.

The research from Hewitt also showed bond yields continued to fall in October, with long fixed-interest bond yields were just above 4.7%, which Reidy claimed would "increase the funding pressure on defined benefit (DB) pension schemes as the value of their liabilities will have increased over 2008 while investments have fallen".

"Pension fund investors can expect volatility to remain in the short-term, however we feel that for anyone with a medium- to long-term time horizon, markets provide an attractive buying opportunity at current levels," she added.

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