IRELAND - The overall returns for the National Pensions Reserve Fund were up 7.5% during the third quarter of 2009 due to gains realised in its equity holdings.
NPRF's portfolio is divided between the discretionary portfolio, which holds €13.9bn (US$20.5bn) and invests in a variety of assets, and the directed investments portfolio, which has €7bn invested in Bank of Ireland and Allied Irish Banks.
The discretionary portfolio earned a return of 11.7% in the three months ended September 2009. Over the first nine months of the year, it earned a return of 16.4%; since inception, its annualised performance is 2.2%.
NPRS said its third quarter positive performance was mainly due to its equity investments as global markets continued to climb from their March lows - boosted by encouraging economic data and better-than-expected corporate earnings.
However, it said the strength of the rally had left markets vulnerable to earnings disappointments and weakness in economic indicators.
The discretionary portfolio is made up of 62.3% of large cap equities, 5% of small cap equities and 5% of emerging markets equities.
In addition, it holds 10.3% in cash, 8.8% in bonds, 3.7% in private equity, 3% in property, 1.3% in currency and asset allocation funds and 0.6% in commodities.
The directed investments allocation was the result of a governmental decision to fund a capital injection in the two troubled banks via the NPRF (Global Pensions, February 13, 2009).
As a result, NPRF holds preference shares in these two Irish banks, which are valued at cost and whose payable dividend - an 8% coupon - will not be recognised until declaration by the bank concerned.
Until then the directed investments performance is assumed to be 0%, which negatively impacted the overall performance of NPRS.
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