IRELAND - Irish pension managed funds had an average return of 13% in 2006. This is eight percentage points less than in 2005.
"Pension funds were adversely affected by equity markets performing lower last year than in 2005," Anthony Corrigan, investment analyst at Dublin-based Mercer Investment Consulting, explained to IPE. He pointed out that especially North American and Japanese equities saw a decline from quite strong performances in 2005.
The average equity exposure in Irish pension funds was 76% at the end of September 2006 which was similar to 2005 (77%). "I am expecting the same range of equity exposure for 2007," Corrigan said.
The best performing fund was the managed AIB Investment Management fund (14.7%) with Canada Life/Setanta performing worst (9.1%).
Returns over the past three years were 14.9% p.a. on average, over the last five years only 6.6%. Over the past ten years, including major crashes in the equity market in that period, returns were 9.8%.
"When considering these returns it is important to remember that the investment horizon of most pension schemes is generally over 25 years, and that equities have historically provided significantly higher returns over the long-term than bonds, property or cash, although at the cost of greater volatility," Rubicon Investment Consulting noted in a press release.
The Dublin-based firm added that in 2006 equity markets recovered well in December supported by strong corporate earnings and significant merger and acquisition activity.