The assets under management of Irish pension funds increased from E39.9bn at the end of 1998 to E48.5bn in December last year, according to the annual investment survey by the Irish Association of Pension Funds (IAPF). The reasons for this 24% increase in value of the Irish pension industry were the strong investment returns, of around 20%, and cashflow.
The IAPF’s survey highlights that the proportion of assets held in unitised form increased to approximately one third of the overall total, from E12.2bn in 1998 to E16bn last year. This could be attributed to both the move to defined contribution (DC) plans and the popularity of consensus funds among institutional investors, as both systems use unitised funds.
Segregated funds, which fell from 57% to 56.4%, still remain the main investment vehicle used by Irish pensions funds representing E27.3m.
In terms of asset allocation, the exposure to equities has increased from 58.4% to 65.3%.
The study found that pension funds in Ireland continue investing more in national stocks (20.5%) than in Euroland (13.5%), despite last year’s underperformance of the Irish equity market in relation to its overseas counterparts.
The weakness of the euro also boosted overseas investments, with the Japanese and Pacific Basin regions enjoying the greatest increases.
The most significant change in the fixed income arena was the big switch from Irish to euro bonds. The proportion of overall assets invested in Irish government bonds fell by almost 50%, from 18.3% to 9.7%.
Investments in cash and other short-term instruments did not experience big changes during 1999, a fact that, according to IAPF, proves that funds remain fairly fully invested. Paula Garrido