Gap closes between Merrion and Irish Life in Rehab race

IRISH LIFE Investment Managers was the big winner in the Rehab Great Investment Race in May.

A 3.4 per cent advance during the month solidified its position in second place, closing the gap between it and front runner Merrion Investment Managers, which has been on top since the charity investment race began in November.

The race gives five fund managers €100,000 to invest on behalf of Rehab. To date the overall value of the fund is €541,549, slightly lower than at the end of April. The slip in the total value of the fund reflects a volatile month for markets, as deepening concern about the euro-zone debt crisis coupled with high commodity prices weighed on sentiment. The threat of rising inflation and the resulting hike in interest rates stoked fears that monetary tightening may hinder economic growth.

Nonetheless, improved earnings figures from the banking and technology sectors provided some solace.

Irish Life Investment Managers was the best performer in terms of monthly performance in May, gaining 3.5 per cent to €124,822, leaving it in second place overall.

The decision to invest in takeover targets appears to have paid off, with the fund, which is managed by Seamus Magner, taking profits – and a dividend – from German engine maker Tognum, a takeover target for Daimler and Rolls Royce.

The fund sold out of BSkyB, which is being taken over by News Corporation, at a small profit.

It also bought and sold investment firm 3i Infrastructure, making a gain.

Merrion Investment Managers maintained its position as the top performer, though the fund lost 1.7 per cent in May, leaving it fourth in terms of monthly performance.

The weak performance was mostly due to Nokia and natural resource company Anglo American. “We purchased both stocks early in the month, selling Nokia soon after following a decline in its price and Anglo American in the latter half of the month,” said Alex Kinsella of Merrion Investment Managers.

Kleinwort Benson Investors put in a strong performance in May, coming second in terms of monthly performance to leave it third overall. While fund manager Noel O’Halloran said it was “difficult to make money in these uncertain and volatile equity markets”, it succeeded in adding 1.5 per cent during the month.

Rehab’s own team was third last month, closely behind Kleinwort Benson with a return of 1.4 per cent. Fund manager Frank O’Brien’s strategy of taking a more passive approach appears to be paying off, with the fund, which holds a mixture of cash and large-cap equities, making small but steady gains over the past two months after a slow start.

AIB Investment Managers remained in fifth position, losing just over 7 per cent due to the fund’s focus on Japanese equities, including Toyota. The fund has lost almost a quarter of its value.