The headline performance figures for last year published this week by the Ireland Strategic Investment Fund (Isif), the successor to the National Pensions Reserve Fund (NPRF), were impressive.
Isif’s so-called discretionary investment portfolio generated a 6.2 per cent, or €500 million, return last year, driving the size of the fund to €8.6 billion. Not bad in the midst of a global pandemic.
That’s twice the average annual rate Isif has delivered since it was set up in 2014. And it also compares well with a number of stock indices in a volatile year for investments, which saw the pan-European Stoxx 600 index drop 4 per cent, the Iseq advance 2.7 per cent, the FTSE 100 slide 14 per cent and Wall Street’s S&P 500 rise 16 per cent.
The big driver of Isif fund’s performance was money committed to international venture-capital and private-equity managers, even though this accounts for less than a fifth of the total portfolio, the organisation said on Monday.
The update also gave an overview of the €430 million of Covid-19 recovery funds handed out to companies, including airport operator DAA, non-bank lender Finance Ireland and Aer Lingus under one of the Government's crisis initiatives launched last year.
But it conveniently omitted any reference to a sizable part of its investment pot: or what’s referred to as its “directed investments” in banks. These were the gun-to-the-head bank investments that the NPRF was ordered by the then government to make during the financial crisis post-2008. No one in the fund would have bought shares in the banks at the time off their own bat.
Responding the questions from Cantillon, a spokesman for Isif confirmed that the overall value of the "directed portfolio" slid to €3.9 billion from €6.9 billion over the course of 2020, driven by an almost halving of the market value of its 71 per cent stake in AIB, to €3.2 billion.
You can see why Isif would want to distinguish between the investments that it has a say in making and the bank bailout holdings. Nonetheless, they cannot be ignored.