Pension funds' performance on the stock markets stalled in April after three strong months of growth in the first part of 2006, according to the latest figures. Laura Slattery reports.

The average group pension managed fund fell in value by 0.1 per cent last month, according to figures issued yesterday by Rubicon Investment Consulting and Buck Heissman consultants.

The fall brings average returns for the first four months of the year to 5.3 per cent. However, there was good news for pension schemes as bond yields reached highs on both sides of the Atlantic. "If bond yields continue to rise and equities to perform strongly, the funding situation of Irish pension schemes will improve," said Fiona Daly, managing director of Rubicon.

Over the past 12 months, the average return was 26.3 per cent, a "very strong" performance, said Ms Daly, while over the three years to the end of April, the average return was a "healthy" 16.7 per cent per annum.

However, over five years, pension managed returns have returned a less robust 4.1 per cent per annum, reflecting the equity bear market of the early part of the decade. But over the 10-year period to the end of April, the average return was 9.6 per cent per annum. "Equities have historically provided significantly higher returns over the long term than bonds, property or cash, although at the cost of greater volatility," said Ms Daly.

The flat performance was due to a mixed month for equity markets, she said. There were strong first-quarter earnings from many companies and positive economic data in Europe, the US and Japan. But inflation concerns dampened investor enthusiasm.