IRELAND - The National Pension Reserve Fund (NPRF) has posted a return of -6.7% for the first quarter of 2009, and figures show almost a quarter of the fund's assets are now invested under the direction of the Minister of Finance as part of the bank recapitalisation scheme.
The quarterly update from the National Treasury Management Agency (NTMA) showed the negative investment performance in the first three months of the year could be primarily attributed to the equity portfolio, as markets remained volatile and "vulnerable to negative news flow".
That said, the -6.7% drop is still an improvement on the same period in 2008 when the NPRF reported a fall of -10.5%. That said, a comparison of performance figures also showed the value of the fund dropped almost €4bn over the year from €19.4bn at 31 March 2008 to €15.5bn a year later.
The quarterly update meanwhile confirmed that although the fund had "maintained a cautious approach to equity investment since the onset of the credit crisis" and had built up cash reserves of almost 10% of the total fund by the beginning of 2009, these had now been reduced to pay for the €3.6bn investment into the banks.
The report noted the fund had also liquidated all its government bond holdings to add to the cash to help pay for the purchase of Bank of Ireland preference shares, which pay a fixed dividend of 8%, and account for 23.4% of the NPRF's total asset allocation.
A breakdown of the fund's asset allocation showed large cap equities has the highest allocation of 52.2%, or around €8.1bn of the fund, then followed by the 'directed investments' ordered by the Minister of Finance, valued at €3.62bn, although this only accounts for holdings in the Bank of Ireland and not the €3.5bn that will be injected into AIB.
Other holdings by the fund include a 7% allocation to fixed income, while cash balances equate to just over 5% of the NPRF, private equity, property and small cap equity all have around 3% of the fund with the remainder split between emerging markets equity, commodities and currency.
Elsewhere, the report noted the preliminary NPRF return for 2008 had been revised following updated property and private equity valuations, to produce an unaudited return of -30.4% down from the previous figure of -29.5%.
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