IRELAND - The average Irish managed pension fund fell -18.9% in 2002 blighted by worldwide financial uncertainty.
During the final quarter of the year funds gained 1.8%, according to latest figures published by Mercer Investment Consulting.
KBC Asset Management (+3.4%) and Standard Life Investment Managers (+3.3%), were the best performing managers in Q4, with Baillie Gifford (+0.5%) and Acorn Life (+0.7%) the worst performers. Bank of Ireland Asset Management (-13.1%) and New Ireland (-13.7%) were the highest ranking funds over the course of the year. But the laggards over 2002 were KBC Asset Management and AIB Investment Managers, returning -24.4% and -24.0% respectively.
“The better performing managers over the year benefited from holding an underweight position in equities, while also positioning themselves at a stock level towards more defensive areas of the market,” said Tom Murphy, head of Mercer Investment Consulting, Dublin. Performance in the first quarter 2002 was relatively flat, but both the second (-10.0%) and third (-12.6%) quarters recorded significant falls.
The final quarter opened with the average fund up 8% during October/November, before falling back significantly in December.
“Global equity markets fell over 30% in 2002. While the magnitude of this decline is extreme, this has also been the third consecutive year of negative equity market returns – an event not witnessed since the 1940s,” added Murphy.
“With the typical fund maintaining an equity weighting of around 70% over this period, the past three years have certainly impacted on the health of Irish Pension Schemes.” But Murphy was quick to point out the long-term nature of any equity investment.
“Longer term returns provide the most appropriate measure of pension fund performance. Over the 10 year period, the recent declines are over-shadowed by the strong double digit growth of the mid to late 1990’s. The average return over this period is +10.9%, which far exceeds inflation and should provide some comfort to investors at this time,” he said.
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