IRELAND - Irish managed pension funds posted a -1.1.% return in January, research from consultancy firms has shown - the first negative return since October last year.

Figures from Hewitt Associates’ monthly Managed Fund Index highlighted the 1% drop, but noted the average return for the three months to the end of January 2010 remained positive at 4.3%. 

The figures meanwhile revealed the average managed fund return for the last 12 months to 31 January was 21.7%, with the Index suggesting that “funds have recovered to levels seen prior to the collapse of Lehman Brothers”.

Betty O’Reilly, investment consultant at Hewitt Associates, said: “Equity markets declined in the month of January, reflecting investor uncertainty on the sustainability of the economic recovery.”

However, she argued it is “not unusual for markets to retreat after such a strong advance, particularly as investors awaited clearer signals on the economy and earnings. Concerns remain over what action China will take to reduce inflation”.

Rubicon Investment Consulting’s monthly survey of 10 group managed funds reported an average return of -1.2%, with Irish Life Investment Managers producing the best performance with a -0.4% return.

Canada Life/Setanta and Standard Life Investments also produced above average results of -0.5% and -0.7% respectively, however Aviva Investors posted the worst return of -2.6% in January. This was almost a whole percentage point worse than the next lowest return of -1.7% posted by Eagle Star/Zurich Life.

That said, Rubicon noted all of the managed funds surveyed delivered double-digit growth over the past 12 months, with the average fund returning 22.7%. Merrion Investment Managers produced the best figure of 29.8%, while at the bottom of the table even AIB Investment Managers achieved 15.1%.

Research from Mercer also noted that pension funds experienced “much tougher conditions in January” than in the second half of 2009. It said while the firm had calculated an average return of -1.1%, “more cautiously positioned de-risked funds were broadly flat in the month, with some producing a small positive return”.

It attributed this to the fact that these types of funds benefited from a “firm performance in bond markets”.

Noel Collins, senior investment consultant at Mercer, said: “This volatility experienced in January may well set the scene for 2010, which looks like being a very uncertain year as the global economy attempts to sustain the growth recovery kicked-off during 2009. In such an environment, effective governance and decision-making will be of key importance for pension fund trustees and decision-makers.”

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