IRELAND - Global market volatility caused Irish managed pension funds to produce an average return of -2.8% in May.

Figures from Rubicon Investment Consulting's monthly survey of 10 managed funds showed that Standard Life Investments produced the best result last month with a return of -1.9%, while Irish Life Investment Management returned a below average figure of -3.9%.

Despite the decline, Rubicon's figures showed the average return of managed funds in the first five months of 2010 was 3.8%, with Standard Life again taking the lead with a return of 5.3%, and Aviva Investors producing the lowest performance with a 2.2% return.

During the 12-month period to May 2010, all the managed funds surveyed produced double digit returns with an average of 20%, although the figures are less positive over three and five-year periods at -8.8% and 0.8% respectively.

Figures from Hewitt Associates' Managed Fund Index of more than 20 managed funds also showed an average return of -2.8%, as the consultancy noted both equity and bond markets remained volatile in May.

Evelyn Ryder, director of investment consulting at Hewitt Associates Ireland, said: "Pension funds suffered from the turbulence in the global markets this month. Global equities declined by 2.13%, while eurozone equities fell by 5.61%. This decline pared back some of the significant gains made in equity markets year to date."

Hewitt did note, however, that equity markets with the exception of euro equities were still posting high single digit or double-digit returns for the year to date despite equity markets retreating. Meanwhile, bond markets remained volatile over concerns about euro stability.

"Investors are unsure what to make of the response to the problems in the peripheral eurozone countries," Ryder warned.

"Bonds yields continued to decline during the month and longer dated bonds are now down by close to 0.5% over the last two months, which will substantially increase the liabilities of defined benefit pension plans. Coupled with falling equity markets, this will see many pension funds fall back into severe funding difficulties."