IRELAND – The National Pensions Reserve Fund has made its first move into emerging markets equities with a €142m investment via Alliance Capital Management, which has been under scrutiny from US regulators.
The investment is around 1% of the €14.9bn fund’s value and follows an announcement in February that it planned to diversify its investments.
“Our target allocation to emerging markets is 2% and we intend to split this allocation between two funds,” a spokesman said. “One percent has been invested with Alliance Capital Management and we are currently finalising arrangements for investment with a second fund.”
The investment was made in September. Earlier this month Alliance Capital agreed to pay almost $1m to settle three “regulatory matters” with three separate bodies.
The first, a National Association of Securities Dealers matter, related to the personal trading of a research analyst.
The second at the New York Stock Exchange involved so-called Electronic Blue Sheet submissions. The third was to do with a Securities and Exchange Commission matter involving “incomplete descriptions of quarterly distributions” to fund shareholders.
The NPRF today reported a return on investments of 14.9% for the year to the end of September and a 6.5% return in the third quarter. It made an investment return of €1.8bn in he year so far.
National Treasury Management Agency chief executive Michael Somers said the third quarter was driven by the continuation of the summer equity market rally into the autumn.
"A combination of strong corporate earnings and a low inflation and interest rate environment provided a favourable context in which markets responded," Somers said.
However, markets had now entered a volatile phase in the face of continuing high energy prices and tightening Federal Reserve policy.
Somers paid tribute to NPRF chairman Donal Geaney who died on October 7 of a long illness.
"Donal chaired the Fund since it was established in April 2001 and his vision and commitment were central to its development. We will miss his enthusiasm, his wit and the vast experience he brought to the Fund, as well as the extraordinary amount of time and dedication he gave to this most difficult task."
The NPRF was recently warned over potential conflicts of interests in its public-private partnership deals by the International Monetary Fund.