Irish pension funds have continued to perform well, with the Hewitt Managed Index showing returns of 1.2 per cent in April for Irish Pension Managed Funds.

However, Hewitt said that a number of investment managers have recently created new products that differ significantly from the traditional 'managed fund'.

"In many cases these have superior risk/return profiles and are better diversified than their Management Fund counterparts," explained Deborah Reidy, Hewitt Associates.

"Many access new asset classes not previously available to smaller DB schemes or DC schemes such as commodities, active currency, hedge funds, private equity, etc."

Reidy said that despite Eurozone equities and bonds falling by 2.4 per cent and 0.8 per cent respectively in April, global equity markets were stronger, returning 1.9 per cent for the month.

Changes to the traditional Managed Funds have led Hewitt to alter how it surveys pension funds, launching a new version of its inVision Survey. The 'managed fund' category has been eliminated, and instead a larger survey of 'multi asset' funds has been created, which includes managed funds as well as the newer more diversified funds.

"Volatility is a measure of the dispersion of the returns. For example, if the volatility is ten per cent, this means that two thirds of the time the monthly return of this fund has been in the range of plus or minus ten per cent around the fund's average return. The higher the volatility measure the greater the dispersion of returns (or risk).

For the end of April 2010, global equities had a three-year annualised return of -5.0 per cent and a volatility of 18.5 per cent and bonds showed a three year annualised return of 5.8 per cent with a volatility of 5.8 per cent. Over the same period," Reidy said, "the Hewitt Managed Fund Index, an index of traditional managed funds, had an annualised return of -7.0 per cent and a volatility of 14.3 per cent.

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