Pension funds rise by 12.3% in 2003

IRISH pension funds increased in value by an average of 12.3% during 2003, according to a survey of pension funds released yesterday.

Figures published by Mercer Investment Consulting showed the average increase over the last three months of the year was 5.7%, as equity markets continued to show signs of recovery.

Tom Geraghty, senior investment consultant with Mercer, said the overall positive returns posted by each manager in the survey masked the volatility in performance seen during the year.

“The average fund fell over the first quarter by 5%, recovering by over 18% since March,” said Mr Geraghty, who added that the end of conflict in Iraq, followed by a sustained improvement in economic fundamentals, resulted in improved market sentiment as the year progressed.

The pension funds surveyed failed to match the performance of the ISEQ index over the year. The ISEQ recorded one of its best increases in recent years and rose by 23.3% during 2003.

Irish Life was ranked the best performer of the 15 managed funds in the Mercer survey. It recorded an increase of 14.9% over the year and a 6.2% increase in the final quarter.

Two funds managed by Hibernian Investment Managers tied for first place over the October-December period, with rises of 6.4% each over the three months.

Standard Life Investments recorded the lowest increase of the 15 funds surveyed over the year, but still managed an 11.4% return in 2003. Irish Life’s Global Access Fund was the lowest performer over the last quarter, recording an increase of 4.6%.

Mercer said funds with a higher component of bonds did not perform as well as in previous years, while portfolios with exposure to US stocks suffered from the slide in the dollar against the euro.

“Equities significantly outperformed bonds in 2003, reversing the trend in place since 1999, while across equity markets, the euroland region was the outperformer for the euro investor, due principally to the weakening dollar over the year,” Mr Geraghty said.