Pension funds slump during May

Pension funds lost money in May, recording their worst performance so far this year, according to figures published yesterday.

Heissmann Consultants, formerly Buck Consultants, reported that group pension managed funds gave up 1 per cent of their value in the month, reducing investment returns in the year to date to 2.9 per cent compared to 4 per cent at the end of April. The one-year return has fallen from a high of 22.7 per cent in March to 14.2 per cent.

After a strong start to the year, pension funds have lost ground in two of the past three months, gaining just 0.2 per cent in the other.

For the first time in 2004, all the funds surveyed showed a loss, with Eagle Star doing worst with a fall of 1.8 per cent. Bank of Ireland Asset Managers, Standard Life and AIB Investment Managers all weakened by more than 1 per cent.

Hibernian Investment Managers was the top performer but still surrendered 0.5 per cent of fund value in the May.

Over the year to date, Irish Life, which was the strongest performer in 2003, has done best along with Hibernian. Both have produced a five-month return of 4 per cent. KBC Asset Management, by contrast, has added just 1.1 per cent to fund value so far in 2004.

Pension funds are still struggling to recover from the slump in equity markets between 2000 and 2002. Over three years, the average fund has lost 4.4 per cent of its value per annum with KBC again the worst with a per annum loss of 8 per cent compared to Bank of Ireland's 1.6 per cent.

The latest figures mean the average pension fund has gained just 0.7 per cent a year over the past five years.

Ms Fiona Daly, head of investment consulting at Heissmann, said the strengthening euro offset gains in US markets in a month when many other markets performed poorly. The only market offering Irish investors a positive return was Britain, and that was due to sterling advance against the euro.

Worries about oil prices and interest rates also unsettled equities. However, Ms Daly said these concerns diminished as the month progressed.