| Ireland's National Pensions Reserve Fund firmly on the diversification track |
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| 24/07/2005 | |
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The National Pensions Reserve Fund (NPRF), designed to provide partial funding to the Irish pension system from 2025, counts on alternatives to reach its objectives. The €13.3 billion fund, which just published its 2004 annual report as well as its results for the first half of 2005, has already committed €200 million to its international property investments and 120 million to commodities, as well as €75 million to its private equity programme, which was recently launched. The scheme has set an 18% target for alternative investments over the next 5 years. "The Commission plans to invest 8% of the Fund in both property and private equity by the end of 2009," said Donal Geaney, the NPRF Commission Chairman. "This will involve investments of about €2 billion in each asset class over that time period. Moneys committed will be drawn down as the property and private equity fund managers identify suitable investment opportunities." The NPRF expect its property and private equity investments to be concentrated in the US and Europe, with a slight bias towards Europe given growing opportunities in this region. Investments in private equity will be made through a mix direct investment, separate account arrangements, as well as funds of funds. For the NPRF, which has delayed investment in hedge funds due to the difficulties in identifying top managers as well as the lack of regulation of the sector, those investments in alternatives are primarily about increasing the Fund's potential return without substantially altering its risk profile. "These new investments are funded from the Fund's cash flow rather than through liquidation of existing equity and bond investments", underlined Donal Geaney. The scheme has so far performed relatively well, with a global return of 7.9% for the first half of 2005 totalising €945 million in capital gains (5.3% for Q2 2005). Donal Geaney said that the Fund had been boosted by the strong performance of its European equity investments, particularly in May and June, against a background of lower interest rate and inflation expectations, and strong corporate profitability. Returns in other equity markets had been assisted by the weakening of the euro while eurozone bond markets had also performed strongly. At this pace, the NPRF is projected to grow rapidly over the next two decades, reaching the equivalent of 40% of GNP by 2025, the first year of drawdown. Julien Laplante |
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Articles of the same Topic : Pension funds UK
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