IRELAND - Irish managed pension funds recorded a positive return of 2.4% in August, the first positive return since May, Hewitt Associates has revealed.

Figures from the monthly Hewitt Managed Fund Index showed as a result of the positive return, the indexed negative return for the year-to-date is now -15.1%, while the return for the 12 months to the end of August 2008 is -18.5%.

The positive return of 2.4% follows two consecutive months of losses, when Irish managed pension funds reported a fall of -8.3% in June and -2.6% in July, although Hewitt warned "the relief is only small and barely recovers the losses of the previous month".

That said, Deborah Reidy, from Hewitt Associates, noted the 10-year return has exceed inflation, with a yield of 4.6% per year over the decade, compared with inflation in the same period of 3.8%.

Reidy said: "The upturn has been led by positive returns from the major equity markets. North America was one of the strongest markets delivering over 7% this month, helped to some degree by the strengthening of the dollar over the month. The ISEQ was also reasonably strong with a return of 3.4% over the month."

However she admitted for the year-to-date "the Irish equity market still has very disappointing returns of -33.5% to the end of August".

In addition, Hewitt revealed bond yields continued to fall in August, with long fixed interest bond yields now just below 4.7%. It claimed this would further 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.

Reidy said: "The outlook for equity markets is still uncertain. Pension fund investors can expect volatility to remain in the short term but we would urge investors to consider the investment returns in light of the longer term returns as pension investments are typically 15 years and longer."

"Investors should be aware that Managed Fund Index shows that over 15 years, pension returns were more in line with longer term expectations at 7.5% per annum," she added.

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