Pensions Reserve Fund rallies after two strong quarters
The fund earned a return of 11.7% in the three months to end September, compared to a return of 4.2% for the six-month period to June. Since inception, the annualised performance of the Discretionary Portfolio is 2.2%. The second quarter of the year saw a 12.2% return, followed by 16.4% for the three months to September.
Of course, the above figures only look so healthy because they exclude the unprecedented use of the reserve fund to bail out Ireland’s beleaguered banks. A total of €7 billion was split equally between Allied Irish Bank and Bank of Ireland.
Minister for Finance, Brian Lenihan, directed the National Pensions Reserve Fund Commission to make the injection of funds into the two banks. Directed Investments are held at cost and the dividend is not recognised until declaration by the bank concerned. That apart, the fund has been performing extremely well.
A spokesman for the National Pensions Fund said: “The equity markets have had a run of good months recently. The 2008 decline had continued into the first quarter of 2009, but then it started to rally in March.
“That solid performance has continued through to the autumn. We have had two strong quarters, right up to the end of September.”
The Discretionary Portfolio’s third quarter performance was mainly due to its equity investments as global markets continued to climb from their March lows, boosted by encouraging economic data and better-than-expected corporate earnings. However, the strength of the rally has left markets vulnerable to earnings disappointments and weakness in economic indicators.
The total fund secured a return of 7.5% during the third quarter of 2009. Over the first nine months of the year, it earned a return of 8.9%. Since inception, the annualised performance of the total fund is 1.4%. At September 30, 2009 the fund’s value stood at €20.9bn.
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