High-yielding Irish equities will be among the best bet for investors in the Republic this year, according to the latest analysis from Hibernian Investment Managers (HIM).

The fund manager said yesterday that stocks such as AIB, Grafton and DCC should deliver the best returns against an unpredictable market backdrop.

The markets in 2005 will be likened to a hippo because they will tend to "wallow" but could be dangerous when moves occur, HIM's analysts have suggested.

The firm's chief investment officer, Mr Roy Asher, also pointed to Irish commercial property as a sound investment option.

The company favours offices over retail investment, arguing that the sector can offer a few more years of "decent return".

HIM is less positive on residential property, noting that a number of its clients had already been diversifying out of the sector into more "traditional" investment types.

A study conducted by HIM late last year found that the average investor who had borrowed to buy a one-bed apartment in Dublin could expect to draw a yield of just 0.8 per cent from the holding.

The right portfolio of equities could be expected to deliver a much more substantial return, HIM argues.

The company is particularly keen on Irish equities that have exposure to growth sectors in the economy such as Grafton, Kingspan and CRH.