IRELAND - Irish managed pension funds generated a negative return of 3% for the month of July, mainly because of their high exposure to Irish equities, according to consultants.

Irish managed pension funds saw their year-to-date performance drop from 4.6% at the end of June to 1.9% a month later as the ISEQ dropped 8% in the last month.

They were "weighed down by the large exposure to Irish equities at a close to 20% of the total fund", Hewitt noted. In comparison, the Irish market accounts for less than 1% of the FTSE World Index.

"This is quite a big bet on the Irish economy," a spokesman for the consultant told IPE.

Mercer agrees, as Tom Geraghty, its Irish investment consulting head, pointed out: "In a world of uncertainty, the one and probably only truism in investment markets is that diversification is king."

That said, the Irish economy has so far rewarded funds which are overweight in Irish equities.

According to the Hewitt Managed Fund Index, the one, three and five-year annualised performance of the 24 funds remains strong at +13.9%, +15.1% and +11.9%.

The three best-performing fund managers judged by their year-to-date performance, both before and after the stock market correction in July, were Eagle Star, Allied Irish Bank Investment Management's (AIBIM) and Irish Life Investment Management (ILIM).

The only managers with a negative year-to-date performance at the end of July were Bank of Ireland Asset Management (BIAM) and New Ireland.