Irish managed funds return 3% in August
IRELAND - Irish managed pension funds have produced a positive return for the sixth month in a row, resulting in an average return of 14.5% in the first eight months of 2009.
Monthly figures from Hewitt Associates' Managed Fund Index revealed the average return of the 23 funds was 3% in August, with Standard Life Investments Consensus posting the best result of 4.1%, while Davy reported the lowest return of 1.7%.
Evelyn Ryder, investment consultant at Hewitt Associates, revealed the sixth consecutive month of positive performance meant that since the end of February 2009 managed fund returns "are up over 24%".
However, poor performance at the start of the year meant while Merrion Investment Managers produced a return of 22.9% in the eight months of 2009, Davy again returned the lowest performance of 2.8%, resulting in an average yield of 14.5%.
The monthly survey also revealed that over a one, three and five-year period the best performing fund was Eagle Star Balanced Fund, with a return of -7.4%, -4.5% and 3.9% respectively.
Despite the improved results in the last six months, Hewitt said the average return on managed funds in the last 12 months is still -11.5%, following the significant losses in the second half of 2008 which produced an average fall of -34.8% over the year. (See earlier IPE article: Irish pensions drop €27bn in 2008)
The continued improvement in the results was echoed by figures from Rubicon Investment Consulting's monthly survey of 10 group pension managed funds, which showed an average return of 2.8%.
Of the 10 funds surveyed, Irish Life Investment Managers produced the best return of 3.9%, while Aviva Investors posted the lowest figure of 2.3%. However, the data confirmed Hewitt's findings that despite a less impressive performance in August, of 2.3%, Eagle Star produced the best returns over one, three and five years.
Rubicon said there was a 14.1% difference between the best and worst performing managers in the eight months of 2009 so far - Merrion Investment Managers with 22.9% and AIB Investment Managers with 8.8%.
The findings also showed that despite the improvements, over a 10-year period the average return was 1%, and only Merrion had outperformed the Irish inflation rate of 3.1% a year by delivering a return of 3.6%, albeit only two of the 10 managers, AIB and KBC Asset Management, reported a negative return over the period.
"Equity markets have risen considerably from their lows in mid March and the gains recorded in August can be attributed to more positive economic data and company earnings results," said Hewitt's Ryder.
And Hewitt warned while the positive performance has helped the managed funds, "there are still many reasons to remain cautious".
Ryder added: "Historical evidence shows bear market rallies can occur for over six months and September is traditionally a month that tests market exuberance. With consumers - the mainstay of the economy - still suffering under a loss of wealth, heavy debt loads, low savings, tight credit as well as high unemployment, it is difficult to envision that the market bounce of the past few months will continue as strongly over the coming months."
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