Pensions Reserve Fund to tender for managers for passive equity portfolio

THE National Pension Reserve Fund (NPRF) is to put out a tender for managers of its €6 billion passive equity portfolio.

The fund said it is not unhappy with the performance of the existing managers Bank of Ireland Asset Management/State Street Global Advisors and Barclays Global Investors but wants to improve the performance of its passive investment strategy.

NPRF chairman Paul Carty said that the return of the fund managers on the passive equity mandate is to simply match the gain on an individual stock market index. However, he now wants the fund managers to switch between active and passive investment strategies, which will deliver the best return for the Fund.

Mr Carty said whichever institution wins the new mandates will have to compete with other managers on a number of stock market indices.

Both Bank of Ireland Asset Management/State Street Global Advisors and Barclays Global Investors will be allowed to tender for the new mandate.

The NPRF, set up to provide for the public sector and social welfare pensions costs, from 2025, said it made a €2.4 billion return on its investments in 2005. The pension fund now has assets worth €15.4 billion, 19.6% more than in 2004.

Mr Carty said the Fund benefited from rising world equity markets in 2005 and by diversifying into property and private equity deals.

Since the NPRF was set up in 2001, with the proceeds from the privatisation of Eircom and an annual contribution equivalent to 1% of gross domestic product, the Fund has earned €3.3 billion in profits for the State.

Equities make up the largest portion of the Fund's assets and the value of its share portfolio increased by 26.9% in 2005 to €12.1 billion.

As part of plans to diversify its holdings the Fund made its first investment in property and private equity vehicles during 2005. Around €400 million was committed to 12 property investment funds.

It has made a foray into the world of private equity with €181m made available for investment with three firms CVC European Equity Partners, Vester Capital Partners and Clayton, Dubilier & Rice.