Investing in pension funds is a long-term business and people with money in them should take limited notice of the league tables published every quarter by actuaries Mercer and Irish Pensions Trust.

How well any particular fund manager has done in the last quarter is of little note to the pension investor, but what is important is the trend of the performance and whether a poorly performing fund manager is improving his position compared with the market average.

For that very reason, last week's figures from Mercer and IPT did not make pretty reading for the biggest pension fund manager in the State with an estimated £10 billion in assets, Bank of Ireland Asset Management.

The results, of course, did make good reading for the likes of Eagle Star and Equitable Life, whose five-year performances were well ahead of the market, mainly on the basis of a much more aggressive investment approach with a higher proportion of assets in equities and much less in secure assets such as cash.

Bank of Ireland Asset Management, in its public pronouncements since the Mercer and IPT figures were published, has made a virtue of its cautious approach to investment. But BIAM has conceded that it was light in equities - particularly Irish equities and high in cash as the bull market turned into a stampede while interest rates plunged. BIAM was caught on both fronts a stock market that was running away from it and sharply lower returns on its cash pile.

Was this a poor investment call by BIAM, for so long one of the top-performing fund managers, or will the group be proved right when it says stock markets are over-valued on the basis of fundamentals?

Certainly, there is a view in some quarters that markets are over-priced but against that a veritable wall of money has driven the Irish market (and other markets) to their current record levels. BIAM has been a lone voice in advocating the argument of restraint while the more aggressive pension fund managers have drawn every advantage possible from a bull market that has exceeded virtually everybody's expectations.

What is worrying for BIAM, and something that pension fund trustees should note, is the continuing deterioration of BIAM's fund performance. Three months ago, BIAM's 12month fund performance was just 3.7 percentage points off the average. The most recent figures show BIAM 11.5 percentage points off the average. That is a serious deterioration and one that behoves pension fund trustees to seek an explanation. BIAM is by no means the only laggard when it comes to fund performance. The Mercer and IPT figures show over the past five years that only five out of 14 pension fund managers beat the industry average of 21.1 per cent average growth. Some under-performed that average by margins that need explanation. Indeed, over that period, Irish Life has been the worst performer, although the deterioration in its fund performance is nothing like as marked as that of BIAM, which has fallen back from such an exalted position.

Irish Life, however, has taken steps to reclaim its position in the market with its consensus fund specifically aimed at maintaining a steady average performance without any Eagle Star-type peaks and BIAM-type troughs. Investing in stock indices and not individual stocks also reduces the administrative cost of the fund.

So, how has Irish Life's consensus fund the only such "passive" pension fund on the Irish market performed in its first year? Exactly as a consensus fund should, with a return of 52.6 per cent against an average of 51.3 per cent for the managed pension funds. A steady return just above the average will, no doubt, appeal to many pension fund trustees who feel uncomfortable with stock markets at record levels and fear that the bull market will be followed by a bear phase.

Needless to say, we will see the leaders in the pension fund league tables trumpet their achievements in the next few weeks, and who can blame them? But a high exposure to equities does have dangers and those excellent performances from the likes of Eagle Star and Equitable Life could very quickly be reversed if Deutsche Bank economist Norbert Walter's forecasts are fulfilled.

Dr Walter, an economist who carries real clout given the size of Deutsche Bank, has said bluntly that markets are over-valued and a 10 per cent correction is "real". But his comments have gone unheeded and the bulls still reign supreme. For how much longer?

Warnings like that could justify BIAM's cautious approach to stock markets in recent years and could certainly justify trustees taking a closer look at the consensus investment carried out by Irish Life's consensus fund.