NTMA still out on fund manager

THE National Treasury Management Agency (NTMA) said it has not made a decision on whether to sack one of its fund managers, at the centre of a financial scandal in the US, from the National Pensions Reserve Fund (NPRF).

Putnam Investment Managers, which oversees around 240 million in assets for the NPRF, has been accused of several market trading abuses in the US.

But Dr Michael Somers, chief executive of the NTMA, said though the agency has discussed the situation it has made no decision to remove Putnam from the list of fund managers who supervise the allocation of funds.

Putnam was charged by the US Securities and Exchange Commission with civil fraud last for allegedly allowing improper short-term trading in its mutual funds and damaged returns for ordinary investors.

It settled with the SEC without admitting guilt.

Dr Somers said: "They are still there and the jury is out as regards what we would do with Putnam.

"There is no risk to money. That is held by the global custodian ABN Amro Mellon.

There is a dilemma about what is going on in Wall Street and all the different groups that seem to be misbehaving somewhat. We are actively looking at this area," he said.

Putnam has already lost a number of pension mandates since its problems arose last September and last month the food group Unilever sacked the company as one of its investment managers.

NTMA director John Corrigan added: "The issue affects the mutual fund industry in US and money held on behalf of NPRF is not held in any mutual fund, but segregated accounts so that the fund has not been involved or affected in any way."

Another fund manager, Invesco, a subsidiary of British firm Amvescap, has also has civil complaints filed against it. Invesco Asset Management has 340 million in NPRF funds under management, though it is not expected to come under the same scrutiny as Putnam.

In 2003, the NPRF sacked Blackrock Financial Management from its mandate to invest 3% of the fund.

The NPRF will put its mandate out to tender.

According to latest NTMA figures the NPRF has swung back into profit, earning 1.02 billion in 2003, a reverse of the deficit of 737m it incurred in 2002 as world stock markets surged last year.

Overall the fund gained 12.7% return, though there was a 17% surge in the equity portion of the fund, though lower bond prices offset some of these gains.

The fund is now valued at 9.55 billion compared with 7.42bn a year ago. Since the fund was established, the Exchequer has made a gain of 290m in its investment.

The fund was set up by the Government to pay for State pension in 2025.