First gains in seven months for struggling pension funds

PENSION FUNDS made some gains in March for the first time in seven months. The average Irish group-managed fund added 2.4 per cent in value last month as stock markets bounced.

However, funds continue to be in the red by an average of 5.2 per cent over the first three months of 2009 and by over 30 per cent over the last 12 months.

Only one fund did not lose money over the last five years and only two are in the black over the 10-year term – and that was before the impact of inflation.

Stock markets advanced in March on hopes that the first signs of a slight economic recovery were beginning to appear. However, Fiona Daly, managing director of Rubicon Investment Consulting, cautioned against reading too much into the figures. “While this recent upturn is to be welcomed, it is too early to know if this signals the bottom of the market.”

Merrion Investment Managers led the way last month with a gain of 3.6 per cent, followed closely by Irish Life Investment Managers (3.5 per cent). AIB Investment Managers (AIBIM), with a 1 per cent gain, significantly underperformed its peers.

To date in 2009, Merrion’s 3 per cent loss makes it the strongest manager. AIBIM, with a loss over the last three months of 7.3 per cent, is faring more than twice as poorly and is well adrift of the next manager, KBC Asset Management (KBCAM) with a 6 per cent decline.

Amid the disastrous losses of the past year, Canada Life’s negative return of 26.3 marks it out as the strongest performer in relative terms, 8.3 percentage points ahead of Aviva Investors (formerly Hibernian Investment Managers).

Over the three- and five-year terms, Eagle Star has outperformed the market with a 10.5 per cent loss per year over the three-year period against an average annual decline of 13.6 per cent and an industry worst of 15.6 per cent at KBCAM.

Over the five-year term, it has lost nothing in a period when the average fund was 2.5 per cent worse off each year and both KBCAM and Bank of Ireland Asset Managers were nursing annual falls of over 4 per cent. Merrion was the only fund manager to record gains over the 10-year period, up 1.6 per cent per annum, with Eagle Star treading water and KBCAM again propping up the table with annual losses of 2.8 per cent before inflation.