PENSION FUNDS recovered more ground in May and, for the first time, all major funds are now in the black for 2009.

The average group-managed pension fund recorded growth of 2.3 per cent last month.

It was the first time in two years that pension funds recorded three successive months of gains. The more cautious investment focus is evident in the fact that the advance in fund values significantly lag the bounce in stock markets since the middle of March.

There was significant divergence in returns, with Merrion Investment Managers adding 3.5 per cent to the value of its funds compared to the 1.6 per cent returns of Bank of Ireland Investment Managers, Eagle Star and Standard Life Investments.

Merrion’s performance means it is the one fund manager reporting double-digit gains for the year to date, more than twice the average return of 5.3 per cent over the same period. The 1.7 per cent gain recorded by AIB Investment Managers in May was enough to see it record a 0.8 per cent gain for the first five months of the year, the first time it has been in the black.

Earlier losses mean Irish pension funds are still nursing losses of 25.7 per cent over the past 12 months. Eagle Star and Canada Life/Setanta, with 12-month losses of 21.9 per cent, are the best performers over the period with Aviva Investors struggling with a negative return of 30.9 per cent.

The recent gains mean half the funds surveyed by Rubicon Investment Consultants are now ahead over the past five years, with Eagle Star at 2.3 per cent growth per annum the strongest manager. The sector average was still in the red at 0.3 per cent per annum.

While all bar four funds are reporting growth over the more relevant 10-year period, none has matched or bettered the 3.3 per cent average annual rate of inflation over the past decade.