Pension funds end first quarter with gains

Irish pension funds ended the first quarter of 2007 with moderate gains after recovering from the sharp equity market "correction" in February.

Despite continuing concerns about the turmoil in the sub-prime mortgage market in the United States and its possible impact on the broader US economy, Irish managed pension funds recorded average gains of just under 1 per cent last month, bringing their return for the first quarter to 1.1 per cent.

AIB Investment Managers (AIBIM) had a particularly strong return of 1.8 per cent in March, despite the fact that both the domestic and US stock markets were flat over the month. Eagle Star, with growth of 1.5 per cent, also outperformed.

On the downside, Acorn Life's 0.4 per cent return put it behind a group of its peers.

AIBIM and Standard Life are leading the pack so far this year with growth of 2.3 per cent and 2.1 per cent respectively. Bank of Ireland Asset Managers (BIAM), however, continues to struggle to overcome the 1.2 per cent loss in February. Despite a monthly gain of 0.7 per cent, it remains fractionally in the red for 2007.

Mercer Investment Consulting said equities had managed to record a gain of 1.6 per cent over the year to date in what has been a period of increased volatility. Bonds lost 0.1 per cent over the same period.

Fiona Daly, managing director of Rubicon Investment Consulting, said merger and acquisitions activity in British and European markets had helped push equities ahead.

Over the past 12 months, AIBIM (11.1 per cent) and Standard Life (10.7 per cent) are the only fund managers reporting double-digit growth. This time last year, Irish pension funds were recording 12-month growth of 24.5 per cent and first-quarter gains of 5.4 per cent.

The average gain for the sector in the past year is 8.4 per cent with Canada Life/Setanta (5.5 per cent) and BIAM (5.6 per cent) dragging that figure down.

AIBIM is now the best performing manager in for all periods up to three years where it reported an average annual return of 15.4 per cent against an average 13.8 per cent and BIAM's lagging 11.5 per cent.

Over the longer 10-year term considered more relevant, Oppenheim continues to lead the way with an average annual gain of 11.8 per cent, well ahead of Canada Life/Setanta's 7.9 per cent, which props up the sector.