IRELAND – Delegates to the Irish Association of Pension Funds annual investment conference in Dublin today voted narrowly in favour of using active investment managers.

They voted 56% to 44% in favour of active managers following presentations advocating both approaches, and a debate between delegates.

But the issue was confused when a difference of opinion was revealed between pension funds and provider representatives.

It emerged that the former voted 58% against active managers while providers voted 63% in favour.

Speaking for active managers was Colm O’Neill, chief investment officer indexation at Irish Life Investment Managers. He argued that changes within defined benefit schemes were working against active managers – as was the move to defined contributions.

And the move away from equities by DB schemes was also reducing the market for active managers.

He noted that the active market in Ireland had grown to 26% at the end of 2004 from 13% in 2002. “It won’t take another 10 to 15 years to get to 50%,” he said. “All the growth is in DC, where active managers have no place.”

His presentation was countered by William Killeen, associated director at the Bank of Ireland Asset Management.

He said there was a “whopping misconception” that passive management reduces risk. “Passive has no theoretical foundation,” he asserted, while active management was rooted in fundamental finance and the need to “maximise the time value of money”.

Simply buying stocks in an index was not the way to go, he told delegates. “Capital allocated on the basis of size alone is capital misallocated.”

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