Pension performance

My pension statement arrived this morning.

Irish Life Global Consensus. The unit price increased 7.6% between 31 dec 2016 and 31 Dec 2107.

Given that equities have done so well over the last year I am disappointed with this.

Other than fume, and let off steam here, thank you Brendan, is there anything I can do about this.

Is the performance as disappointing as I think.

If you look at your fund details you will see only 70% of your fund is in equities.

You would need to get detailed performance data for the other parts of that fund i.e. bonds, property and cash as well as the breakdown of the equity part.

I'd guess currency moves are the biggest factor.

1 euro was worth 1.04 dollars in Jan and 1.19 dollars in Dec. According to IL that global consensus fund in 39% invested in the US. Their standard consensus fund is 46% invested in the US and its gain was even less at 6.7%.

However one reason the US markets have risen so much is because the dollar weakened, so had the dollar stayed still it's possible your gains would have been around the same. You could try telling yourself that anyway.

@ashambles is spot on.

The MSCI World index was up about 7.5% in EUR terms in 2017, compared to around 22.5% in USD terms.

is there anything I can do about this.

In a nutshell, no. You could talk to an independent advisor re moving to a different fund/manager, but other that that, you can do diddly squat.

cremeegg said:

Given that equities have done so well over the last year I am disappointed with this.

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First of all to state the obvious - not all equities did well, in fact several blue chips well under performed. I normally only make one or two trades per year, but I did five this year because there were opportunities to pick up some solid blue chip dividend companies that offer good capital appreciation opportunities as well. These are the typical type of equity you'd find in a pension fund, so that might be a contributing factor.

The other thing to keep in mind is that unlike typical fund managers, pension fund managers are in a position to play the long game. So the question should be how well is it performing over the last 5 or 10 years, not the last 12 months.

I would not be at all concerned about the last 12 or 18 months, but if the fund has been consistently underperforming over the long haul then that is a different matter.

The performance sounds fine to me. With something like IL’s Consensus Fund, you’re looking for it to capture a decent slug of the upside, but not as much of the downside if markets tank.

If I was a Consensus investor, I’d be happy with 7.6% last year.

Gordon Gekko said:

The performance sounds fine to me. With something like IL’s Consensus Fund, you’re looking for it to capture a decent slug of the upside, but not as much of the downside if markets tank.

If I was a Consensus investor, I’d be happy with 7.6% last year.

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I'm a consensus investor and I'm happy enough with return, but as mentioned before the reason it's not higher is mainly due to the weaker dollar.

You might be confusing the consensus fund with some sort of safer fund. There is no downside protection, it's not a safe fund.

Irish life consensus funds try to do something along the lines of follow the average of active funds, they check what other funds are buying and buy a similar mix of assets.

So they'll go up and down in line with the overall markets. The theory is they won't be the best fund, but they won't be the worst.

[broken link removed], you'll see it in line with the average of other funds it went down by 35% in 2008.

Hi Cremeeg,

A consensus fund is a passive fund that tends to track whatever index it is aligned to. In essence the positive return will be below the performance index it is aligned to in good times, and above the downside performance of that same index when markets fall. 7.6% is not a bad return. You would need to look at your own expectations and your attitude to investment risk and return. It should be a fund that aligns to your expectations and you would normally complete a risk profile questionnaire before you invest to gauge your level of expectation, tolerance etc.

Compound interest is in my opinion very understated in long term investment performance. As Einstein stated, "it is the 8th wonder of the world!" A return to 4 or 5% per annum over 20 years will produce a nice return at the end. The problem is where to find this!!

Hope this helps and best of luck.

That's all for the feedback.

It seems that the 7% performance was in line with the market generally. I had seen too many headlines about the market climbing 20% in 2017. In reality that reflects a falling dollar as much as price rises.

This morning I tried to figure out how the fund has performed during the recent turmoil.

The IL website gives the unit price of the fund on 9 Feb as 1.741 and the price on 31 Dec 2017 as 1.796. However the unit price on 31 Dec according to correspondence I received on 18 Jan last was 2.11. Any help to understand this would be welcome.