IRELAND - The Irish National Pension Reserve Fund (NPRF) lost €1.2bn of its value in Q1 as a result of the government's bailout of Allied Irish Bank and Bank of Ireland.
According to €23.2bn fund's quarterly report, it has liquidated €10bn in assets so far this year to meet the government's demand for its contribution to the €85bn EU/IMF bailout of the Irish economy.
It rendered liquid €5.5bn in February and €4.5bn in April from its discretionary portfolio, which now stands at €5.3bn. The discretionary portfolio makes up 42.2% of the fund.
At the same time, it increased by €4.5bn the cash component of its directed portfolio, which makes up 57.8% of the NPRF and comprises shares in the distressed banks and cash toward the European bailout.
The directed portfolio - which will bear the brunt of the bailout funds - lost 12% over the quarter.
The state now holds slightly less than 93% of Allied Irish Bank via the fund. State holdings in distressed Irish banks now make up €7.9bn of the fund.
The discretionary portfolio of 50% equities, 21.4% cash and 28.6% alternatives posted 0.3% for the quarter.
The fund attributed the positive return to the "surprising resilience" of an equity portfolio buffeted, after a strong start to the year, by political instability in the Middle East, the euro-zone crisis and the Japanese earthquake.
The scheme had recovered most of its equity losses by the end of the quarter.
The portfolio's bond allocation is relatively small, made up of 6.1% in euro-zone corporate bonds and 0.7% euro-zone inflation-linked bonds.
The overall return for the quarter from both portfolios was -5.3%, compared with an annual average since the fund launched of 1.3%.