IRELAND - Irish managed pension funds returned an average of 0.5% in June, resulting in an overall positive six months for the sector, Hewitt Associates has revealed.

Figures from the firm's Hewitt Managed Fund Index showed a return of 0.5% for June, which means Irish managed funds achieved a positive return of 11.4% over the second quarter, and a yield of 5.8% for the year so far.

Brian Delaney, investment consultant at Hewitt Associates, said: "Despite the severity of this global financial crisis and a continuing stream of negative economic data, the past six months have been positive for Irish pension funds. Financial markets are showing signs of stabilising, at least in the short-term, and international equity markets are reflecting this improvement in sentiment."

While the index posted the fourth consecutive month of positive returns, early losses in January and February - 1.9% and -5.7% respectively - meant the first quarter of the year remained in negative territory at -5.5%. (See earlier IPE article: Irish managed funds find positive ground)

A positive performance of 8.7% in April, and 3.5% in May combined with the latest 0.5% increase has helped the managed funds improve considerably on the total return of 2008 of -34.8%, or a loss of €27bn.

But Delaney warned: "The global economic crisis, however, is far from over. Continued uncertainty remains about the extent and timing of a sustained recovery. Equity markets have advanced 30-40% from their March lows and now require firm evidence of improving economic fundamentals in order to support the recent rally and sustain any advance from here."

In addition, he suggested investors benefiting from the recent market advance "might consider using this opportunity to reduce overweight positions in equities and increase exposure to other real asset investments, diversified alternatives that will reduce portfolio risk and protect investors from the rising inflationary trends that we expect in the years ahead".

As Delaney pointed out, the policy initiatives implemented by governments across the globe in an attempt to secure the financial system are "historic", but the success or failure of these "will only become apparent in the second half of 2009".   

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