pension - New Ireland Assurance

2
MARKET COMMENTARY
MARKET
Turmoil Returns
COMMENTARY
2011 turned out to be another difficult year as markets More significantly the investment journey provided by our
were hit by a number of issues that dented investor medium months risk of concerted funds, including political effort. our hugely While this successful goes on,
confidence.
After a relatively
The early
calm
part
first
of
half
2011
of
showed
the year
some
and a
strong
quiet
Protected markets will Assets remain Fund, volatile. has been much smoother for
Background
Although it it is is useful in in these pages to to focus focus on on where where rate In short, environment. there is is no Turmoil doubt in that Libya the the last is last unlikely decade to was affect was a a oil
equity July, things gains with changed commentators in August quite and optimistic September. on theA
investors So there when is a lot compared of good news to traditional the economic managed front funds. but
The wave the markets world last of quarter uncertainty continues are at has at a point a seen to washed point be a an continuation time, interesting over time, it’s markets important it’s of place important many as that and politics of that
the prices
a There very few difficult very are much,
large a one number unless one risks for for of it investors. spreads
the positives, economic This to however. This was other
recovery the was and first Volatility the bigger
that first need
oil is
global economy. However, the Libyan crisis, the When the Eurozone debt crisis escalated we had very
Sunshine first every quarter now and of then 2011 then we was we take take very a step a eventful. step back back and Markets think and think are producing decade in many nations. many where Finally, where risk dominated government risk dominated reward. debt is reward. likely to
Japanese and issues economics that
earthquake
have repeatedly disrupted
and more
investment clashed, significantly leaving markets
the investors over
various
the The few to not be Local calls overcome. bad from Market – investors volatile There markets in these no easy can funds. offer fix and Why? rich these pickings Because issues for
The about how our funds are performing in in the longer term. be However, a big problem even if if for this peripheral was the case, eurozone the figures countries above in the
down feeling last 12 strong overall months battered
market in and Euro and continued rally
bewildered.
terms of late to the contribute 2011
First first has 3 we to months had investors’ so far
EU/IMF bailouts all served to dampen this optimism. the of Globalisation these They are, after all, long term funds – they are designed short-term will active take funds time managers delivered doesn’t show that, and for those a to big work mean and on who problem out. what investors customers Global they willing promised. had for the the stomach rest policy make to of makers the ride During same out the hang West are the
on on in
continued
The 2011, amazing concerns. last mainly quarter
into
spectacle Sovereign 2012, as has a result leaving
seen of debt of the
the issues negative Eurozone US
average
Government continued returns debt
managed
crisis in to March. nearly
fund be takea
decisions these to provide a good balance of risk and reward for money
the working storm turbulent in through
long
are hard term. in every often on times long marketplace, rewarded they term protected solutions. for even their investors see patience the from same the and
up the worst of times, the the downside wasn’t as as
centre Many major running
some of stage concern. 8%* the
that investors
out yet in human want
of
the again. In cash
first May, stories The 3 months
to to put put away
because Portugal markets – from of became the
away for for the
Republicans confidence the year. revolution the Were in latest
the long long run. run. For
and the it in products. severe determination. ups Most and downs Irish Globally, investors of the most markets. face companies a somewhat remain unusual in
not For
extreme as the peak-to-trough figures would have you
ability Tunisia Eurozone Democrats
for the of and country the losses
instance, take couldn’t Egypt Eurozone to many to Evergreen agree the investors countries an
as as a despair
an budget. EU/IMF are and to bailout
an example This
still destruction protect looking
of a of typical led package.
a typical to their US
to in choice However, Outlook solid shape, believe.
even with with lower increasing levels interest of debt, rates higher borrowing cash
Outlook
– a portfolio of global assets, mainly shares with a
recoup, currency Japan Portugal – have non-guaranteed
joined enormous diversified
Ireland consequences managed
and Greece for fund where
in people’s seeking
many remains
Different
quite
fund
cheap.
managers
Global
will have
economic
different
growth
opinions
remains
on
Government
I suspect waivered.
debt
a
losing
Italian lot of
its
money 10
coveted
year managers bond
AAA
yields
status
would stayed
from
be bit The balances of short bonds, and term with lower outlook little cost or bases no always exposure than 5 is years to uncertain. Ireland ago. Finally, itself, The
happy worryingly lives assistance investors but probably invested when it not in became the much last no of decade. an longer impact There possible on is is the no no for global point it to strong where It’s vital
and equity however
companies markets
that that we are will
learn we
generally move in
learn from the from
in decade. very the
the
good short
decade.
shape term.
rating
to
agency
leave over it the
S&P
at that 7%
for the
and level
first
sit with in
time
cash Spanish
in
for
70
the yields
years.
rest also of
Of managed Eurozone lost among by debt a the crisis global noise will asset of remain global manager; centre markets or stage a has deposit markets been with the
the rising economy. raise in talking funds They about on international are, Evergreen’s however, markets 9%* 9%* another return return – at in layer least 2010 in of 2010 not and risk at and the for – Interestingly Investment so there is risk, a the positive consensus which for backdrop view
for many years for years stock appears seemed markets, to be
like like a
that
course,
year. significantly.
there
Perhaps
was
even This
very
more resulted
little chance
encouragingly, yet another
the US
market
would an look quietly Irish to European bank, remarkable typically leaders improvement with to take some strong in form Ireland concerted of underlying Inc. action The
a the
volatility emergency
markets price 10%* being return to worry asked in 2009 about by investors. without and their acknowledging impact should the the falls not falls in be in short equities theory, term will
proved at perform least. itself itself to 2011 positively
to be be all looks too between
all too real. like real. being Unprotected now
Unprotected a and tale the of funds end
actually
–
run
which meeting
out of
spiked of EU
cash,
sharply leaders
but problem
the in second December
was triggered
half that of guarantee to economy stabilise from now the looks the currency Irish set to State. and grow the at Most Eurozone a faster retail pace customers economy. in 2011 two
2011 finally
dismissed 2007 and 2008. too lightly. Further unrest in the Arab world worlds of like funds
the Evergreen year.
like – developing Evergreen
I am can however provide can countries provide
a excellent strong outgrowing excellent
believer returns that
returns for investors
West, short
by the
– saw has some
much
come concrete
broader
down considerably. proposals put
issue of the
Investors forward
huge amount
are to deal no
of view Global than the expected growth latter is offering expected – despite as to the be the slowdown sluggish “risk free and rate”, there global for the will
with
could The ongoing
some of
increase Greece
the fundamental
an already debt saga volatile continued
issues facing
oil price with
the
to levels the latest
Euro
longer that companies
term but investors they the need but markets
having they to be need able very
is notoriously little be withstand able debt to difficult
while withstand periods to
Governments
of call periods extreme so I do
money the
quick
US
to
owes;
take fright
it also highlighted
every bit of
the
bad
deepening
news or continue
economy.
to be
Irish
concerns
Government
over the
Bonds
major world
meanwhile
economies
have
currency. This included increased fiscal unity among
benchmark by which other potential investments should
negative would aid You instalment are seriously very very likely of likely hamper €12 aware aware billion economic that euro that Evergreen, being Evergreen, growth. released like Meanwhile most like by most the
have not volatility. of extreme try far to call too volatility.
much, short term. peripheral The issues eurozone that drive countries short
divisions
headline,
on Capitol
it seems.
ability to stay out of recession. Markets will continue to
Eurozone countries and Hill a more and raises active serious role for the questions ECB. be
the managed nuclear funds, crisis suffered in suffered Japan a peak-to-trough is a already peak-to-trough having fall of
grapple
been measured. one
with
of
these
the With best 5
issues
year performing deposit
over
assets
the
rates
next
of in over the
number
5% world, p.a.
of
as
EU/IMF. This followed a divisive Greek parliament serious fall vote of struggling term market while movements the big core change countries too frequently.
over the management of the economy and country as a (gross) months. investors readily realise accessible, that the Irish why Government take the push risk for probably of structural putting will
Clouds
Towards political which approximately passed impact a 40% around further in in the the austerity the
period period world
from package from –
the
while the collapse amid collapse the riots Green
of on of
Outlook
whole. The the
Lehmans to to the
words end of
the “double December
bottom of of the market
dip recession” the ECB offered
market in March in March 2009.
started your changes pay money its debts in into return after volatile all. for The markets? loans. graph Plenty below In fact, of shows opportunities 2012 the may recent be
Of
for
2009.
Although it it can be be difficult to to lift lift our our heads heads out out of our
Party the course streets. risks Ireland Work remain is continuing and the issues
without a on single a second that led
Dail bailout to all the
Eurozone seat, the for I prefer to focus on the longer term picture which of our is in
reappearing.
banks access to 3 year term funding in an the It That figure casts casts a long a long shadow shadow over over the fund the but
investors increase is also year worth that but
to in
domestic make price noting many money, of that Irish the
economic but Government customers global a
problems, our
need economy
our to finally keep bonds a continues become
funds
close from
funds are
eye just
market
effort German Greece to
volatility which alleviate doesn’t tell
Green is in due
tell the the full
party possible
the to past
story
is be
full story of
now finalised strains
few years
how of Evergreen
the on by dominant bank
have mid September. funding
not gone
how Evergreen has
force in keeping with my own long term investment ideals. I
investors
to
on €0.60 grow.
has driven risk
are driven by
to along
Globally,
again.
the
almost the
most
by global
We way. €0.95.
the global economy
all
companies
know It will
economy and
that be remain
and the
a deposit
outlook
bit of solid
rates time shape,
the outlook is on
can’t before
away. 2012. is on
Baden With no Württemberg, sign a permanent
performed for for investors a
investors over stronghold solution,
over the term of
the of Angela you can
their Merkel’s expect assess my investment prospects by asking simple
Just as A As
the total I write
US of crisis €489 this commentary,
began billion to in fade, funds the
the were headline
eurozone lent in to the
crisis the with lower levels of debt, higher cash balances and lower
term of their
remain economic balance
higher growth
positive.
than As mortgage translates always, As always, risks rates into abound. indefinitely better employment
risks abound.
but with
business banks In
ruling Greece’s investments.
party debt for issues past to 6 influence decades. investment World economic markets questions such as ‘Do I believe economies will continue
re-erupted
on news these sections
and another
terms. reads It
dread-word
was “Spain hoped bond
–
that yields
“contagion”
the banks jump cost bases than 5 years ago. There remains plenty of
– Irish numbers In particular, and
pressures we have on
a couple the the euro euro
of area more
area tough well are
budgets
would well
growth for some use
is time some
unlikely come. of this money to buy the debt of room
banks
to grow for over further
now
the improvement
among the best
longer term’ or as ‘Do equity
capitalised
I think markets
in Europe,
above 6%”, as if we needed a reminder that the
that the remain issues
came back into common to be affected, usage. but the This attractiveness
time it was the on documented. the way, but Equally for our there customers are are concerns – the about Irish about how people how the –
peripheral Eurozone countries and so help alleviate the far
troubling
below need the to
markets
high fill the points deposit
at present
achieved book
will
in at
be
2007. any cost is fast
eurozone credit crisis has a long way to run yet. US
resolved positively
debt
from troubles The Fund an investment Centre on on our our perspective website is is a of very very clean useful vs. tool tool dirty for US will US fare will when fare when monetary monetary support support comes comes to an end. to industries for
Even crisis.
in
judging judging
the mighty While
Greece
this
the the probably long long
US is
and
term term a having step
their
in
continuing
will performance performance
strong the right
(the Kleinworth of of
questions direction
inability
funds. funds. You asked it is
to disappearing. there may finally The be first light two at pillars the end of the of Irish the tunnel. banking As
employment numbers, a key measure of the strength of over the longer term?’ If the answer is ‘Yes’ then I can
not collect Benson can end.
Investors can about likely taxes,
graph graph its ability to be cut sufficient costs
the Alternative progress the progress to manage and/or
of Energy the of the its its
unit unit debt. own. pay
Fund price price The There what
for is up one for US
to up congress they no short owe. system Investing uncertainty have is the begun and commitment affordability the process of are money of the cutting two order biggest deposit to achieve barriers rates.
the world’s largest economy, have disappointed
of the to the the
more is expect
last few 10 On the other my investment side, fears to of a perform double well dip recession (over the in longer
term French, the
equity last set to
fix German
years. 10 agree
to the
funds At years. an
the in At time positive the increase
fundamental and Italian banks
of time writing territory of in writing the
and
US
complex have considerable
the this most the debt
quarter). most ceiling
problems For
a to financial customers the remaining
return. doing In
state-owned
the business case of with our
banks,
investment us, this the is situation good funds news this
of
often than not of late. Performance of the
recent recent other above big is term).
price was US a long
On are This
the fading. term is the commitment.
other side, In essence Germany, of While
fears of confidence long term it is important investing.
a double dip levels recession are to very pay
facing exposure the to Euro. Greek Markets government are looking debt, for leading reassurance to fears Irish for taxpayers our industry subsidising too. high deposit rates must surely in
engine price $14.3
for 31 was of trillion world
December for 31 in growth, December the
2010.
next China, 2010. I
few is
produced I as produced weeks. much dependent
a
While a graph graph this attention
of strong. the US Worldwide, to the short
are fading. corporates term market
In Germany, are confidence for movements the most levels part and in
that European recent bank leaders recapitalisation are committed efforts to protecting were the not be are
The of agreement Evergreen Evergreen US continues prices is prices practically which which to a allowed grow, certainty, allowed me albeit me warnings compare compare at a from the the slightly price debt particular Many coming
managing risks how to
very strong. costs remain an this end.
Worldwide, very impacts in 1
well the year market
corporates and on deposit the keeping as investors discussed rates look
are a close risk
for the eye above destined
on politics as economics and the impact of the current
appetite,
most on that
Euro enough. currency Italian and sovereign are willing bond to yields take the rose strong to worrying action to
disappointing agencies price that investor an about investor pace, might rating might China have downgrades have paid continues for paid a for unit US to a in unit grow debt the in fund the are at at
a
it will debt. is dip important
part managing
make below for 3% not
costs
turbulent to and lose the Irish sight average 5
very well
markets Year of the managed long
and keeping
in the term
a
short fund nature has
handover close eye
term.
that levels; needed.
of leadership
Government Bond Price
fund anytime at
Italy’s
anytime
credit The deal
over the over
rating previous the previous
was December
the Communist
cut
10 years 10
and should years
rumours go
party with price the
had some
is
of
to returned the
slightly new issue alarming for markets pace to contend and a with. two-tier Neither Europe the as US is at However, investment. 8%*
on debt. over the I the am past longer once 3 months, again term reminded I maybe believe Irish of these a investors Warren
something will be
way 95
be price quashed to providing no-one
31 December at 31 that this in
December France reassurance. the West can
2010. It is useful 2010. might It to is lose Ultimately, predict
break useful its
the to AAA a with solution any
decade break status. the may Buffet
into This is the nature of investment. The risk and rewards
struggling or investment to pull markets together. themselves At time are of used writing to any resolved actually quote
90 simply consider “I never
because investing attempt
they again to make
must. in 2012? money on the
certainty. to
We have seen
Politicians
the Euro the
decade three: into scrambled
problems
three:
will
contain
be reached
the crisis
because
but struggled
simply stock
go hand
market.
in hand.
I buy
The
on
wide
the
range
assumption
of funds
that
included
they could
ECB question looks being about raised to announce about the an increase world’s number in interest 1 possibly 85
put, there is no alternative.
This is the (and nature hopefully) of investment. the worst The fall risk in markets and rewards any of
to agree, or act quickly enough, or provide enough * close
here NIA the Pension market
80allows investors Consensus the next
choose Fund day and
the up mix 7.9% not reopen
that for they Q1 it
are 2012. for ten
Bright
rates economy’s spells go hand in hand. The wide range of funds included
1. Those and who Portugal ability with to a risk
invested looks repay of
in set debt. heavy
the to A showers
period get real a January so-called sign of the
2001 bailout times us are likely experience in the run up to the equity
detail to give investors the confidence and reassurance to Source: years.”
comfortable 75 www.newireland.ie
The with. With all of the funds the best risk
(in
1. Those who invested in the period January 2001 to here allows investors choose the mix that they are
December
we the live global escalating
form in. outlook Eurozone could be debt summarised crisis erased follows: the equity the market bottom March 2009. It is worth noting that the
2004 of a very and remain expensive invested: loan – whatever about 70
eurozone gains they management tool is time.
December
so of desperately earlier economy 2004 in and the is sought likely year remain and to struggle, invested: sent many possibly index slipping returns Happy S&P comfortable New
65 500 index Year. with. has With nearly all of doubled the funds (in the local best currency risk
a These bail-out investors it’s certainly suffered the not full a brunt hand-out). of the market Increasing
back into On These the into the economic investors recession red. This suffered front, this impact in year; the was the Eurozone full naturally US brunt economy there of much the continues is market likely more management tool is time.
interest collapse. However, none of these investors were down
terms) 60
* Performance
since that
is quoted
market
gross
bottom.
of taxation
This is reflected
and net of
in the
severe Against
collapse.
rates this
However,
backdrop while several
none
the
of
average countries
these investors
managed are suffering
were
fund rising
down
was
∗
unemployment on
to be
their
a
for
divergence
the European
original investment
between
indices;
at the
stronger
the S&P
end of 2010.
core
500
countries
finished Source: Bloomberg & Factset. Returns are local
to grow, albeit quite slowly; and the Chinese economy
On performance 1.5% p.a. fund of management our equity based charges. investment The figures funds, given with
the down on year their some back original 6% where and investment it struggling August started at while and to the make another end Eurostoxx of ends 2010. 2.5% meet 50 On in currency and for prices indices.
will average of probably Germany they do are quite and up by well, France, somewhere assuming whose in politicians the economies region don’t of do are our are
* Performance
estimates managed fund only
is quoted increasing are
gross
not by a
of
reliable approx. taxation
guide 55%* and
to since net
the
of that
fell suggests September, average by almost they a lot leading 18%*. more are up effort Despite to by a and somewhere loss the political of US around losing will the is 9% its needed region coveted for the tof
** Source: www.newireland.ie Performance is quoted
anything 12%*. performing crazy. strongly, Against and this the backdrop, weaker peripheral global market performance
1.5% p.a. bottom. fund
of your There management
investment. is still ground charges.
Past to performance be The made figures up
make
is but
AAA quarter 12%*. status, the (figures eurozone 10 year quoted work. US treasuries gross of tax were and one charges). of the best Not gross of tax and charges.
corporations countries who should continue continue to struggle. to make This steady disparity profits. will this Source: not
given
a does reliable
are New estimates
show Ireland. guide the to
only
future power
and
performance.
of
are
the
not
market
a reliable
to
guide
performing
resolve
only was the assets scale of of the year, loss troublesome as strong demand for investors led The 2. Those who invested between January 2005 and
to the performance of your investment. Past
yields Despite likely extent result
July
2. Those the
2008
who difficulties, in further
and remain
invested the interest
invested:
between global rate economy hikes as
January continues the ECB
2005 and to serious issues given the time. The key for us at times
but the falling
to
manner from
which
3.3%
economic
of the to loss 1.9% too over
growth
– 12 markets months*.
and corporate
regularly performance is not a reliable guide to future
profitability perform keeps its
These
July 2008 well eye is reflected
investors
and and on inflation.
remain the corporate stock market
are still
invested: sector growth remains depends, low in such
currently down on their
performance.
as these is to maintain our focus on the longer term
oscillated between strong growth in the morning and big
to I debt
investments.
These
think a large and it
investors
is extent, quite worth profitable. on drawing
The worst
are
whether
affected
still
attention Most investors
currently metrics remain the
were those
down suggest performance sanguine
who
on stock their picture.
markets The
losses
US economy
the afternoon;
invested
investments. are around continues
or
in May
The “fair
07 and
worst value”, to
vice
be
versa,
they
affected but quite with resilient
depending
are currently
were plenty
down
those of and overand
whether
we
on
or of our scared medium at risk the funds risks during play; this period in the where current they
by
who
behaved
around
invested under-valued now
the exactly
20%*.
in
seen
latest May companies
On average
07
as 8
news
continuous
was coming
and
we would
those
they the are
have quarters
from
mix.
who
currently
liked of them invested in
down
positive
US,
environment, greed can turn to panic in a matter of to * Source: Moneymate. Performance of the Pension Managed
this
by
behave. economic
Europe or Asia.
days.
period
around
are
20%*.
In growth. particular,
down
On
approximately
average This the has BNY
those supported Mellon
10%*.
who invested
Global US markets Fund from 10
in
Real
this
th March 2009 to 30 th June 2011 is quoted gross
Return Outlook though period are
fund concerns down
produced
approximately still remain a positive over 10%*. how performance the economy during will of tax and fund management James charges. Skehan,
2011 Outlook
The react credit of when 2.3%** crisis the with started stimulus Elements in the measures commercial falling by are just sector removed. 0.9%**.
Pension Sales Manager,
with
This sub-prime
3. Many Those of the who key invested influencers since of July market 2008 returns and remain over the
New Ireland
Concerns
is remarkable
invested: 3. Those who continue mortgages performance
invested to and grow since
a about collapsing given
July China’s
the
2008
banking year
economy and
system. that we
remain as
had. It
next
has The few
now average months
largely
will managed shifted
be political. fund to the fell Unfortunately,
sovereign by some 2.5%**. sphere
as we
–
Again, inflation invested:
corporate have seen all becomes of debt so these often
a
is pretty investors bigger the
and
low, past are bigger
government up and on to their issue.
such debt investments. This
extremes
looks
is pretty
In likely Again, fact to those result all who of in higher these invested interest investors after rates March are which 2009 up will did on dampen very their
enormous. recently, markets Risks tend remain to expect high action in many much areas. faster
well investments. indeed. In fact those who invested after March
Quantitative economic
than politicians
activity. easing can
Recently,
deliver (Governments it.
China
Solving printing once
the money) current
again
cannot displayed 2009 Warning: did
continue
very Past
the well sheer forever,
indeed. performance is not a reliable guide to future performance.
Greek crisis (“solving”
scale
really nor of can its
means the capabilities current stopping low in opening interest it from
the
spreading
Jiaozhou
to
bay
other
bridge,
countries;
the worlds
Greece
longest
itself is
cross
in for
sea
a
bridge
couple
which
of very
is
tough
a staggering
decades)
26
is
miles
likely
long.
to take many