FRANCE - The French national pension reserve fund, FRR says its assets rose by €3.3bn after a modest 4.8% investment return for 2007.

Around half, €1.7bn, of the increase is due to endowments received from the French government, the fund's executive board announced during its results presentation.

FRR which invests just under 65% of its assets in equities, said it's investments structure is "gradually evolving toward the target strategic allocation that was set by FRR's supervisory board in May 2006".

This includes increasing its current 0.8% allocation in alternative asset classes to a total of 10% for overall diversification.

"Due to the rise in investments in private equity (venture capital, real estate, infrastructure), which are by definition less liquid, the implementation of this target allocation remains very gradual," explained the fund.

Bond investments, currently 33.5% of the entire portfolio, continue to play a key role in achieving diversification with respect to its equity holdings.

For the full year 2007, the global performance of the FRR, net of all fees, was a return of 4.8%.

FRR commented: "This return, while lower than what has been observed in prior years (around 10%), should nonetheless be viewed within the context of the FRR's average performance since inception, which is 8.8%, far ahead of the opportunity cost of not reimbursing the public debt."

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