National Pension Fund reports 10% for first quarter

The National Pensions Reserve Fund today reported a 10% fall for the first quarter of 2008.

The fund's return dipped 10.5% for the first three months of this year up to March 31.

The report said the quarter proved an extremely challenging one for investment management everywhere as markets felt the impact of the subprime crisis in the US, the dislocation of international credit markets and lower economic growth generally in key economies.

Over the quarter the FTSE Eurobloc index fell 16.0% while the S&P 500 fell 16.5% (in euro terms).

The fund’s value at the end of March was €19.37m.

Despite the poor performance during the quarter and similar difficulties in the bear market of 2002, the fund is still showing a positive return of 4.2% for 2007 from its inception in 2001 to the end of March 2008.

As a result, the fund has earned a total of €3.8bn in excess of the Exchequer contribution since it was established.

The fund has recovered somewhat since end March and has gained 4.5% so far in April.

The fund earned a positive return of 3.3% in 2007, bringing its value at end December 2007 to €21.1m.

The positive performance in 2007 was mainly driven by its equity investments notwithstanding extreme volatility during the second half of the year arising from the subprime crisis and the resulting credit crunch.

Commodities also performed strongly while bonds were broadly flat for the year.

Performance was assisted by the fund’s policy of hedging 50% of its foreign currency exposure.

This limited the negative impact of euro's strength on non-euro denominated returns.