IRELAND - BlackRock and State Street Global Advisors (SSgA) could lose significantly, with the National Pension Reserve Fund (NPRF) expected to re-assess its investment strategy after the announcement it would support Ireland's bailout with a €10bn payment.
Martin Haugh, partner at LCP Ireland, said the National Treasury Management Agency (NTMA) - which supervises all mandates, manages the fund's cash and acts as transition manager - would look to withdraw from some asset classes.
"They may look to get out of some assets they feel are underperforming," he said.
"I'd be surprised if they cut everything off the top, just because, by having to invest the €10bn, effectively, they are going to be changing the whole logic behind the fund."
Haugh said he suspected a full review of investments would be conducted, but conceded that the "quick solution" would be to shave off all of the mandates.
"I'm not too sure if whether or not the whole nature of the fund will change, given the level of exposure to both Ireland and the banks, whether they will look to change the mandates for the remaining €7bn," he said.
If the NPRF were to keep its current asset allocation in place, instead only cutting mandates down in size, the biggest losses would likely be incurred by BlackRock.
At the end of last year, the asset manager was responsible for four mandates, ranging from large-cap equity in the euro-zone, North America and Japan, as well as a small-cap equity mandate, again targeting the North American continent.
While all four mandates were passive, their total value was in excess of €3bn, a figure that will have increased after the 6% returns posted by the discretionary portfolio in the first nine months of 2010.
Additionally, the largest single external mandate is held by SSgA and Bank of Ireland Asset Management, which were recently bought out by SSgA in a €57m deal to form State Street Global Advisors Ireland.
The company holds four mandates totaling €2.3bn, with around 80% of assets in a euro-zone equity mandate.
A further €350m were invested in European countries outside the European single currency, with a smaller combined exposure of €67m to property in the UK and North America.
However, the NTMA held €2.7bn in cash at the end of 2009, a sum that increased to more than €4bn by September of this year.
That alone would meet more than 40% of required assets, and if taken into account, would significantly reduce the impact of drawing down the NPRF's assets 15 years ahead of schedule.
When asked for comment, the NTMA only confirmed figures reported yesterday that said the reserve fund would be required to contribute between €9bn and €10bn toward the European Union bailout.