IRELAND – The €16.3bn National Pensions Reserve Fund made commitments of €70m to two US-based property investment vehicles in the second quarter.
The fund committed €31m to a vehicle managed by Capital Trust and €39m to vehicle managed by Pramerica.
According to the fund, the briefs formed part of its continued implementation of its strategic asset allocation announced in February 2005. The fund has a target of 8% allocated to real estate to be achieved on a phased basis by the end of 2009.
It currently has 1.4% of its portfolio invested in real estate – amounting to €234m – with €592m committed to property investment vehicles.
The NPRF stated that it intends to access the property market indirectly through property investment vehicles. However, while a range of structures may be used, the primary focus is on the selection of private property funds.
Meanwhile, the fund reported an overall negative investment return of -3.4% in the second quarter of this year, but a 1.3% positive return for the first six months.
It explained that its ”relatively high European weighting and the Commission’s decision to maintain an underweight position in bonds in view of the historically low yields of recent years have enabled it to report a positive half year in what is a difficult market environment.”
The fund also revealed that it is close to finalising the €6bn passive equity mandate re-tender competition it announced in March.
It said: “The fund has sought tenders for both traditional passive equity products and also for products which guarantee index returns or pay a premium over index returns.”
It also emerged that it is “close” to selecting a number of pooled currency investment funds.
This would “introduce a limited amount of active management” into its foreign currency exposure.
According the fund’s 2005 annual report, also released this week, investment manager fees rose to €19.6m from €16.1m in 2004.
The fund’s overall fees totaled €23.8m - reducing overall performance by 0.2%. That compares to €18.3m in fees in 2004 which took 0.15% from performance.
Securities lending earned it €6.9m (2004: €4.3m) while it gained €1m from brokerage recapture.
During the quarter, the NPRF also committed a total of €215m to six private equity investment vehicles.