IRELAND – The average Irish pension managed fund fell 18.9% in 2002, despite gaining 1.8% in the final quarter, according to research conducted by Mercer Investment Consulting.
According to the figures, performance in the first quarter of 2002 was relatively flat, but both the second quarter (-10.0%) and third quarter (-12.6%) recorded significant falls. The final quarter opened very encouragingly, with the average fund up 8% during the October/November period before falling back significantly in December.
Says Tom Murphy, head of Mercer Investment Consulting: “Global equity markets fell over 30% in 2002; while the magnitude of this decline is extreme, this has also been the third consecutive year of negative equity market returns – an event not witnessed since the 1940s. With the typical managed fund maintaining an equity weighting of around 70% over this period, the past three years have certainly impacted on the health of Irish pension schemes.”
On a positive note, however, Murphy stressed that a long-term view provides a more realistic view, and over the 10-year period the average return is +10.9%, which “far exceeds inflation and should provide some comfort to investors”.
In its study, Mercer also looked at the performance of individual investment managers.
Over the year period, Bank of Ireland Asset Management (-13.1%) and New Ireland (-13.7%) were the highest ranking, outperforming the average return of -18.9%. KBC Asset Management and AIB Investment Managers ranked bottom, returning -24.4% and -24.0% respectively. But KBC managed a remarkable recovery in the fourth quarter ranking top with a +3.3% return.
Explains Murphy: “The better performing managers over the year benefited from holding an underweight position in equities, while also positioning themselves at a stock level towards more defensive areas of the market.”
Over the five-year period to end of 2002, Montgomery Oppenheim topped the survey (+6.4% per annum) followed by New Ireland (+5.6% pa). This compares to an average return of 2.4%pa.
Standard Life Investments (+0.5% pa) and AIBIM (+0.3% pa) were the underperformers.