IRELAND - The National Pension Reserve Fund (NPRF) returned 9.2% in 2004 and saw its value rise to e11.7bn, up from e9.5bn at the end of 2003.
According to a report by the National Treasury Management Agency, which has managed the fund since 2001, the NPRF commission committed e1.4bn to the equity markets during the year.
“This effectively completed the averaging in market entry approach adopted by the commission since 2002 and increased the fund’s equity holding to 76% at end year,” the NTMA noted.
“At 12.7% the fund remained underweight its benchmark bond holding of 20%. This is as a result of a tactical decision by the commission not to commit additional moneys to bonds at the current stage of the interest rate cycle.”
Allowing for the 2004 Exchequer contribution of e1.177bn, there was an appreciation of e948m in the value of the fund during the year, giving the overall investment return of 9.2%.
During 2004, the fund appointed new managers to small cap equities and corporate bonds mandates. Acadian Asset Management was awarded the EAFE (Europe, Australasia, Far East) small cap mandate while UBS Global Asset Management won a US small cap mandate. Deutsche Asset Management was appointed to the eurozone corporate bond brief.
The NTMA said the two small cap mandates have been allocated 1% of the fund and had been funded while the corporate bond brief had been allocated 2% but had not yet been funded.
It is estimated that three quarters of Irish people of working age today will benefit from the NPRF in retirement. At the end of 2004, the fund’s asset allocation sat at 76% equities, 12.7% bonds, 0.1% property and 11.2% cash.
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