IRELAND - Ireland's E7.7bn National Pensions Reserve Fund (NPRF) has stuck by its long-term equity position despite a near- 4% drop in capital value since its inception last year.
But the fund, which has lost 3.5% between April 2001-June-end 2002 due to market volatility, still compares favourably with returns achieved by the average Irish managed pension fund which fell by 9.69%. The fund also outperformed its long-term benchmark by 9.57%.
At the end of June, the NPRF had a 54% allocation to global equities, and 31% to bonds. But a NPRF spokesman insisted that the fund’s long-term strategy of a 80/20 equities/bond split is “still appropriate”.
Mercer Investment Consulting has already carried out two reviews since April 2001 - one after September 11, and one in April this year.
The allocation will be split between Eurozone bonds (20%); Euro equities (40%); US equities (26.4%); Europe (ex-Eurozone) 6.8%; Japan (5.25); Pacific Basin (1.6%). The fund is precluded from holding Irish Government securities.
The NPRF’s market entry into capital markets was a gradual one with the an initial E3.7bn positioning in January 2002. A further E2.3bn was committed in April. Before that the fund was held in cash. The fund added that the remaining E3.2bn still held in cash will be invested by year-end, in part to the global equities portfolio to be managed by Capital International and Dresdner RCM Global Investors.
The NPRF also confirmed its interest in private equity investment, stating that the fund would be open to Irish infrastructure projects through public private partnerships if proper returns could be demonstrated. The fund is currently looking to commit to real estate, non-government bonds and small cap equities. A meeting has been penned for September. Hedge funds are also up for consideration.
The fund was set up by the Minister for Finance Charlie McCreevey in April 2001 to partly prefund public service and social welfare pension liabilities
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