IRELAND - Irish managed pension funds posted a return of around 1.4% in February, pulling back from a 1.1% loss the previous month, research from consultancy firms has revealed.

Figures from Hewitt Associates' monthly Managed Fund Index showed the average return was 1.4% last month, to produce an overall year-to-date return of 0.3% following the decline in January through market weakness.  (See earlier IPE article: Irish managed funds fell 1% in January)

Despite the losses in January, the gains in February mean the average managed pension fund for the year remains strongly positive at 31.1%.

Brian Delaney, investment consultant at Hewitt Associates, said: "There are many conflicting signals and news stories circulating which are causing much investor confusion. Markets remain nervous of sovereign debt concerns in Greece and other European countries."

That said, he added "there are positive signs that the global economic recovery is sustainable. The decision of the US Federal Reserve to increase the discount rate - the rate at which it makes money available to banks - signals the improved stability of financial institutions".

Elsewhere, findings from Rubicon Investment Consulting's monthly survey of 10 Irish managed fund managers produced an average return of 1.3% over the month. Three of the managers - Aviva Investors, Setanta Asset Management and Merrion Investment Managers - tied for the best performance with a return of 1.5%, while even the lowest performing manager, Irish Life Investment Managers, produced a positive result of 0.9%.

Overall, Rubicon's research suggests most of the funds covered by the survey have moved back in the black again for 2010, as the average return over the first two months of the year was 0.1%.

Despite posting one of the best performances in February, however, Aviva Investors currently posts the worst performance over the two months of 2010, with a return of -1.2%.

The average return over the past 12 months reached 31.8%, with results ranging from 38.8% from Merrion Investment Managers and Irish Life Investment Managers, to a low of 23.7% posted by AIB Investment Managers.

And Mercer research suggests the average managed fund return reached 1.5% in February, while even the more cautiously positioned de-risked funds - which tend to be more invested in bonds - also returned more than 1%.

The consulting firm claimed conditions have been tough for investors in 2010, and said a number of ongoing concerns about the prospects for recovery in the global economy have led to "muted performance" by stock markets in recent weeks. 

In particular, it noted there are specific concerns in Europe over the funding position of a number of countries in the Eurozone region, including Greece, which have weighed on the euro currency. However, Mercer argued while the euro fell sharply against the dollar and other currencies, this has boosted the value of euro returns from overseas markets, in cases where the currency exposure has been unhedged and therefore explains the positive performance recorded by pension funds.

Brian Griffin, head of investment consulting at Mercer, said: "Already this year we have seen markets react to a number of different concerns and factors, making it a difficult environment for investors and for pension fund trustees. However, such an environment does produce investment opportunities, and it is important that clients make the most of such opportunities in such a difficult environment."

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