The National Pensions Reserve Fund (NPRF) will diversify its portfolio of investments to include property, commodities and public private partnerships, it was announced today.
The NPRF, which was set up to address the future shortfall in pension funding, reported a 9.3 per cent return in 2004 bringing its total value to €11.7 billion.
Mr Donal Geaney, Chairman of the NPRF, said that the strong returns in 2004 built on those of 2003, to make a healthy contribution towards meeting Ireland's future pension liabilities.
Mr Geaney said the NPRF would allocate 18 per cent of its fund to property, private equity and commodities over the next five years.
Mr Geaney said that €200 million has been available for investment in Irish projects since 2003 and that the NPRF would add to this should opportunities arise.
While suitable projects had been slow to materialise, progress has been made recently with the NPRF joining a consortium tendering for the M50 motorway upgrade.
Mr Geaney said "In future, rather than joining particular consortia in tendering for projects, we will make equity and/or debt finance available to the winning bidder provided we are satisfied with the prospective rates of return."
The NPRF has decided not to invest in hedge funds for the moment. Mr Geaney cited difficulties in identifying consistent top quartile managers and the lack of regulation of the sector for the fund's current aversion to hedge funds though this decision will be revisited in the future.
The fund concluded its market entry by 'averaging in' the €6 billion of its original funds into the market.
Mr Geaney said 2004 was a "significant year" in the NPRF's development and 2005 promises to be another very active year of implementing the investment.