"In terms of performance, for 2005 we were ranked number one for the first 10 months of the year, but in November and December Irish equities took off and we lost a number of places to finish the year mid-table." This is how Gary Connolly of Setanta sums up the performance of the Canada Life/ Setanta managed pension fund last year.

Another reason for this trailing off in the fund's performance is revealed by a closer look at the fund's asset split. Its cash holding at the end of September was 9 per cent, increasing to 10 per cent by the end of the year.

Such a high cash weighting significantly exceeded that of virtually all of its competitors, and was a costly move in what was a very bullish year.

Mr Connolly explains that this position did not reflect a preference for cash over equities, but rather cash over bonds, as the company has held the view for the past 12 to 18 months that bonds are overvalued. Also, its property holding of around 2.5 per cent was well below the benchmark.

He describes the fund's investment philosophy as "bottom-up sector-based", which gives rise to a significantly different portfolio to its peers in geographic breakdown.

"A good illustration of this is our weighting in Irish equities in the managed fund," says Mr Connolly, comparing its investment in the domestic market of 8 per cent to an average of about 20 per cent.

"This not a negative view on Irish equities, but simply a result of global stock selection where no reference/attention is paid to the peer group," he says.