Survey reveals €2bn invested in retail

IRISH investors pumped almost €2 billion into retail investment products last year as confidence improved and stock markets rebounded, according to the Irish Association of Investment Managers (IAIM).

The IAIM's annual survey, which was released yesterday, showed investments in managed funds and tracker bonds increased by 34% year-on-year.

IAIM members now manage almost €19bn on behalf of Irish retail investors. This figure does not include pension funds or institutions, which account for a further €93 million.

IAIM Retail Committee chairman Gary Connolly said the improvement in investment levels was significant and was boosted by a generally improved economic backdrop. Mr Connolly said the demand for managed funds confirmed a renewed level of confidence in equity-related products.

Tracker bonds, which allow investors to generate returns based on the performance of a basket of stocks, attracted €470m, 45% more than 2002. Unit-linked funds remained the most popular form of managed investment during the year, accounting for almost €1.2bn.

The survey also found that Irish investment managers now handle almost €1bn in equity-based Special Savings Incentive Accounts (SSIAs). Mr Connolly said investors who had taken out equity-based SSIAs had almost fully recovered the losses experienced in 2001 and 2002 and were now almost on a par with those who had taken out deposit-based products.

Mr Connolly quoted the example of a person contributing the maximum €254 per month to an equity-based SSIA since May 2001, whose investment would now be worth €11,130, according to the IAIM. This would be just 2% behind the value of a variable rate deposit account that had seen the same contribution level, said Mr Connolly.

The survey included the effect of Personal Retirement Savings Accounts (PRSAs) for the first time. The new government-sponsored scheme to increase personal pensions attracted €32m by the end of December.

IAIM chief executive Ann Fitzgerald said the PRSA market would grow considerably in future years as employers signed up to PRSA providers and facilitated employees who wished to take out a personal pension.