IRELAND - Average equity allocation of Irish pension funds has soared to 74% at the end of the first half of 2004, the highest level in four years.
Research by Mercer found that total equity holding ranged between 65%-78% as at end June 2004.
However, the consultant noted that allocation between equities and bonds has not been the significant driver of relative performance, as some managers that maintained the highest equity allocations failed to beat the average return. This is despite the fact that equities outperformed bonds to the end of June.
Pension funds continued the upward trend that began in April 2003, posting an average return of 5.3% -- the fifth consecutive quarter of positive growth for pension funds. This return translates into a twelve-month average of 14.2%.
As at June 30, AIBIM’s Multimanager Managed Fund topped the Mercer survey for the first six months with a return of 7.2%, followed by ILIM’s Global Access Fund on 6.4%.
The underperformers for this period were KBCAM returning 3.0% and AIBIM’s Managed Fund at 3.9%. Over the twelve-month period, ILIM’s Managed Fund and Hibernian Life, both returning 15.6%, were the best performing funds.
Mercer said that the emergence of manager of manager funds such as AIBIM Multimanager & ILIM Global Access showed that the emergence of such products has emanated from a growing demand from smaller/medium sized pension funds to appoint specialist manager arrangements with the broad objective of reducing volatility through offsetting both single manager and investment style risk.
Over the five-year period to June 30, Montgomery Oppenheim, which posted a return of 5.4%p.a, tops the survey, with BIAM returning 3.4%p.a following behind in second place.
This compares to an average return of 0.9%. AIBIM returned -1.9%p.a and KBCAM returning -1.5%p.a were the underperformers over this period. Over the 10-year period, the losses suffered over 2000-2002 are overshadowed by the strong double-digit growth of the mid to late 1990s and the recent recovery.
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