Ireland’s NPRF reviews strategy amid bank bailout
IRELAND - The National Pension Reserve Fund has acknowledged it will have to review its investment strategy in the light of a government bailout of the Irish banking sector.
The move comes as the fund posted a near -30% return on its investments in 2008.
Ireland announced a €5.5bn plan to recapitalize three leading banking institutions on December 21, with most of the funding coming from the state pension fund.
The National Treasury Management Agency, which oversees the fund, alluded to the bailout in its preliminary results released on New Year's Eve.
It said: "While the NPRF Commission will need to review the detail of its investment strategy in the light of the recapitalisation programme, on a broader level it will continue its approach of investing across a range of real and financial assets in order to maximise the Fund's potential long-term return."
The fund's investment return from January 1 to December 30 2008 was -29.5%.
The NTMA said of the NPRF: "Its annualized performance since inception is 0.6% (compared to 6.6% as end 2007). It market value at December 30 2008 was €16.4bn."
The result reflected "the exceptionally difficult global conditions which marked 2008" - which saw the major international stock indices fall around 40%, with the Irish ISEQ index falling 66%.
"All long-term fund have been severely affected by these extreme market conditions."
The NTMA said the fund's performance would ultimately be determined by the long-term growth of the global economy over a 25 to 30 year period rather than by "sharp market movements in response to extreme events".