Pension funds perform strongly in June

Pension funds enjoyed a strong performance in June, recouping losses made earlier in the quarter. The average group pension managed fund returned 1.3 per cent in the quarter, bringing returns for the first half of 2004 up to 5.1 per cent on average.

Hibernian Life is now the top pension fund manager for the first six months of the year, achieving growth of 6.2 per cent. KBC Asset Management was the worst performer over this period, delivering a return of 3 per cent.

Describing the half-year returns as "respectable", Heissmann Consultants said positive economic news was the main driver of the recovery in June.

Ms Fiona Daly, head of investment consulting at Heissmann Consultants, said the consensus was that markets might not do anything spectacular, but should continue to "trundle along".

"As long as there isn't too much volatility in oil prices and interest rates do not go up too fast, we would be hopeful that the gains made so far this year won't be lost and that they may in fact be added to. But it is difficult to say for certain what will happen in the next six months," she said.

The Irish equity market continued to outperform global markets, with the ISEQ index returning quadruple the world equity return of 1.4 per cent.

Ms Evelyn Ryder, investment consultant at Hewitt & Becketts, said most Irish managers held over 30 per cent of their Irish equity exposure in just two stocks, meaning they could be vulnerable to the performance of specific stocks.

For the 12 months to the end of June, the average return on group pension managed funds was 14.1 per cent. But over the three years to the end of June, the average fund lost 3.4 per cent of its value.

Over the five-year period to the end of June, the average return was 1 per cent, while over 10 years, it was 9.5 per cent. AIB Investment Managers (AIBIM) props up the table over 10 years, with a return of 7.9 per cent.

Mercer HR Consulting, which monitors the performance of specialist "manager of manager" funds, noted the strong growth achieved by two such funds, AIBIM Multimanager and Irish Life Global Access, during 2004.