IRELAND - Irish pension schemes lost €27bn (US$36.7bn) in 2008 on the backs of poor performing Irish equity markets, a report by Rubicon Investment Consulting reveals.
Rubicon Investment Consulting managing director Fiona Daly said returns were dragged down by a heavy home-country bias - noting the average fund had a 14pc exposure to Irish equities, despite those securities accounting for only 0.3% of the global stock market. Irish equities declined 65% for the year costing pension funds €4.6bn.
Rubicon tracked the performance of the top 10 managers of managed funds in Ireland.
It found Setanta Asset Management was the best performing manager of the year, though the manager reported returns of -29.6pc. Eagle Star returned -30.5pc for the year and Bank of Ireland Asset Management rounded out the top three with returns of -33.4pc for the year.
Setanta's €355m (US$486.7m) Managed Fund held a defensive position throughout 2008, holding a heavier bond weighting and cash position than most its peers and less property exposure, said Alan Hickey, marketing director.
The managed fund has about a 7% weighting to Irish equity, he said.
Officials were also overweight pharmaceuticals within its €1.5b Global Equity Fund, which helped boost returns. The managed fund invests a heavy portion of its assets into the global equity strategy, said Mr. Hickey.
The global strategy invested 14% in healthcare, about four percentage points more than the MSCI World index, said Hickey.
Officials at BIAM and Eagle Star could not be reached for comment.
The worst performer was Hibernian Investment Managers, a firm that has since been rebranded as Aviva Investors. The firm's managed fund returned -38.8% for the year ended December 31.
Going into the fourth quarter, Aviva had a higher equity weighting and lower bond weighting than its peers, said Rubicon's Daly. "Starting the fourth quarter with a higher equity weight would work against them," she said.
Aviva were contacted to comment on the results but have not yet responded.
Partner Insight: In recent years, pensions administrators have seen scheme member engagement increase significantly. The advent of Pensions Freedoms in 2015 and the increased choices faced by members have led to a sea-change in the levels and types of...
Purna Bhudia looks at how the PPF's investment strategy has evolved, especially in the area of credit
Two consultancies have reported decreases in defined benefit (DB) transfer quotation requests in Q3, and said guaranteed minimum pension (GMP) equalisation could impact transfer activity.
The Association of Consulting Actuaries (ACA) and Royal London have proposed a "pensions pound" to "radically simplify" defined benefit (DB) pensions rights.