The total value of Irish pension fund assets increased by nearly 17 per cent to £30.8 billion (€39.1 billion) at the end of 1998, its highest level ever, according to the Irish Association of Pension Funds (IAPF) annual survey.

"Given the volatility in world equity markets and the continued low level of inflation during 1998, this is a very favourable return overall," the association said.

Irish property performed strongly over the year, delivering the best return of 39.2 per cent.

This was closely followed by European equities, excluding Britain, at 27.2 per cent, Irish equities at 25.5 per cent and North American equities at 24 per cent.

Japanese equities delivered a return of just 1.8 per cent while Pacific equities were down 9.5 per cent, reflecting the financial difficulties in Asia last year.

The IAPF survey also found that the recent trend of falling fixed income weighting continued, with fixed interest investments accounting for 26.4 per cent of total assets compared with 26.8 per cent at the end of 1997 and a high of 38.7 per cent at the end of 1992.

Within this, there was a slight decrease in Irish fixed interest stocks in favour of euro zone stocks.

There was also a decline in holdings of cash and short-term instruments, while pension fund investment in property was broadly unchanged at just under 6 per cent.

Equities accounted for 58.4 per cent of assets. One particular feature was an increase in exposure to continental Europe which rose to 10 per cent at the end of last year from 7.7 per cent at end-1997.

In total, Irish investments accounted for 60.8 per cent of the total with overseas investments accounting for the remaining 39.2 per cent.