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Irish sovereign fund increases exposure to alternatives

Ireland’s sovereign development fund returned 3.4% last quarter, as exposure increased towards alternative assets.

According to the latest quarterly update, the Ireland Strategic Investment Fund (ISIF) has seen its cash holdings dip by nearly €90m since the end of 2014.

At the same time, its alternatives portfolio grew by €251m, with the increases spread across all five asset classes.

While property, infrastructure and absolute return fund portfolios all increased slightly, private equity and commodity holdings rose by €80m and €73m, respectively, accounting for nearly 61% of new assets within alternatives.

The ISIF overall saw a 3.4% return from its discretionary portfolio, comprising alternatives, equities, cash and bonds.

The fund’s directed portfolio, valued at €13.6bn at the end of March, saw noticeably lower growth, returning 1.2%.

The directed portfolio, under the control of the Irish government since it was used to acquire shares of Allied Irish Banks and Bank of Ireland ahead of the country’s bailout, also shrank in size compared with the end of last year, with €1.6bn withdrawn by the Ministry of Finance.

The update also revealed ISIF had committed a further €40m to an unnamed venture capital fund that had attracted €35m in third-party capital.

The new project, yet to be announced, meant the ISIF had attracted €3.8bn in capital to projects targeting Ireland, ranging from a €300m investment to Irish Water to €18m in funding for a road construction project.

With a discretionary portfolio of €7.4bn, the ISIF is meant to act as a development fund, boosting Ireland’s economy.

It recently concluded a tender for a peer-to-peer lending fund that it could help finance.

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