Investments in pension funds and equities start to pay dividends again

PENSION fund and equity investors who took a hammering as share values plunged in 2002 have seen global markets rise by almost 10% since the beginning of the year.

Irish Life Investment Managers head of asset allocation Eugene Kiernan said there has been a huge range in returns, depending on which sectors investors were in.

The hot spots over the past eight months have been in technology, some of the consumer areas and in financials, according to Mr Kiernan.

"Technology has been the outstanding winner around the world. Investors can see this most easily in the performance of the NASDAQ index in the US, which is up some 33% so far this year," he pointed out. On the consumer front, Mr Kiernan said there have been solid returns from such areas as media, leisure, selected retail again all areas which do well as the economy picks up steam.

"In fact consumers around the world have played their part this year, and this has meant good stock performances for companies in the US such as McDonalds and Disney and the likes of Next and Granada in Britain," he said.

Mr Kiernan said the financial sector has done a lot of the heavy lifting in the world's indices this year.

Mr Kiernan said that in Ireland it comes down to stocks rather than sectors.

"In general terms, we have seen strong performance from industrial stocks, with CRH and its jump of over 40% having the biggest bottom line impact. What stands out in Ireland as being different from the international experience is the performance of the financial sector.

"While Anglo has been stellar, the financial sector overall has lagged behind the broad market, delivering less than half the market return 5% as opposed to 14%.

Irish financials may well have fallen out of favour with international investors, as other European stocks appeared more geared into capital market upside and the added spice of restructuring," he said.

Mr Kiernan said the signs of value should be more supportive of Irish banks as the final quarter draws near.

"With financials representing just about half of the Irish stock market, it makes a case for the Irish market outperforming other European markets for the rest of this year," he concluded.