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Irish reserve fund returns to bond market

IRELAND – The €15.3bn National Pensions Reserve Fund, reporting a 19% investment return in 2005, returned to the bond market in December.

The National Treasury Management Agency said the fund committed €136m to bond markets last month as euro zone bond yields rose from their September lows.

The fund had previously taken a tactical decision not to make new investments in the asset class while yields were at or near historic lows.

“Investment will continue on a phased basis if, and as, yields rise further,” the NTMA said. It has a €1.8bn bond portfolio, or 11.8% of its assets. It is targeting a 13% strategic allocation to the asset class by the end of 2009.

The NPRF earned a return of 19.2% or €2.9bn, excluding a €1.3bn government contribution, the NTMA said in its annual results.

The fund has grown from €11.7bn at the end of 2004 and now represents 11.4% of gross national product. The returns were boosted by strong equities markets and the weak euro, the NTMA said.

The NPRF put €188m into small-cap equities and €292m into emerging markets equities via pooled funds managed respectively by Alliance Capital and Emerging Markets Management.

Last month Paul Carty was named as chair of the NPRF Reserve Fund Commission. The former managing partner of Deloitte in Ireland will have a five-year term and take over from Donal Geaney, who died in October.

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