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Tuesday, 16th April 2024
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Pension investors face challenge Back  
An IAPF seminar held in Dublin this month warned that investors are likely to face turbulent equity markets in the early part of the year but added that the powerful effects of lower interest rates are likely to prompt renewed growth in economies and profits as the year progresses.

Eugene Kiernan, head of asset allocation at Irish Life Investment Managers, told the conference, ‘Investment Odyssey - Outlook 2001‚ that a significant degree of pessimism about economies and markets is evident and there is growing talk of a hard landing. He said that this was being offset by the move to lower interest rates.

‘Markets have effectively ‘de-bubbled’ with the irrational exuberance of the early part of last year behind them.’ He added that technology stocks are dividing into those that have solid business plans and balance sheets, and those that don’t. Technology will continue to play a big role in investors’ portfolios but it will be as important for those companies that use technology to improve profitability, as those that develop it.

Also speaking at the conference, Geoff Lindey, managing director of JP Morgan Investment Management, said that the major challenge facing investment managers and pension fund trustees is how to capture higher investment returns without taking excessive risks. There was a much more uncertain outlook for the returns from major equity and bond markets. He suggested that the solution for pension funds is to broaden their portfolios into alternative investments such as private equity and venture capital funds because their returns tend to be uncorrelated to major market movements.

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