Business Irish

Wednesday 21 March 2018

Pension reserve made just 0.2pc return in Q3


Peter Flanagan

THE National Pension Reserve Fund (NPRF), which is playing a key role in funding the recapitalisation of the banks, barely made a profitable return in the third quarter of the year, it emerged yesterday.

According to the NPRF's latest performance review, the "discretionary" part of the fund earned a return of 0.2pc in Q3.

Since the Government announced plans to inject close to €10bn from the pension fund into the banks, the NPRF has been split into a "directed" portfolio of €9.6bn and a "discretionary" portfolio worth €5.3bn.

While equity markets performed very poorly during the quarter, the fund's return was due to "an underweight allocation to equities and to the positive effect of the two-year equity index put options" that were purchased in June 2011, the NPRF said.

By the end of the quarter, the fund had invested 28.3pc of its portfolio in equities, while 25.7pc was in financial assets such as bonds.

Nearly 40pc of the NPRF is invested in alternative assets such as private equity, while 6.2pc is in put options -- a form of protection.

Since the NPRF was created 10 years ago, the annualised performance of the discretionary portfolio is +3.2pc per annum.

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