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Irish reserve fund in €6bn equity re-tender

IRELAND – The National Pensions Reserve Fund is re-tendering €6bn in passive equities mandates following a review.

“During the year, the fund reviewed its equity manager strategy in the light of experience and international best practice developments,” the scheme said.

“The overall aim of the equity manager strategy is to channel active manager risk into those sectors and managers most likely to generate returns above the market indices.”

According to its website, the fund has large-cap passive equity briefs with Barclays Global Investors (euro zone and North America) and Bank of Ireland Asset Management/State Street Global Advisors (euro zone).

It said the re-tendering was “not due to any dissatisfaction with the existing managers, but to increase flexibility in the operational management of the fund”.

The re-tendered mandates will ask managers to manage against one or more of a number of indices as specified from time to time.

This would allow the NPRF to “switch quickly between active and passive management, increase options in defining benchmarks for specialist active managers and assist in the overall aim of focusing risk on those strategies most likely to lead to additional return”.

The fund also said today that it returned 19.6% in 2005 – taking its total value to €15.4bn, or 11.5% of gross national product.

“Its strong performance reflected the benefits of the Commission’s averaging-in approach to the markets under which we continued to invest in the difficult market conditions of previous years,” said Paul Carty, chairman of the NPRF Commission.

“As a result the fund’s equity allocation was close to fully invested going into 2005 and it was well positioned to benefit from strong equity markets, particularly in Europe.”

The fund has outperformed its strategic benchmark by a cumulative 10% since inception in 2001.

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