Who said they have to invest it in Irish property though?
The running of the National Pension Reserve has nothing to do with Fianna Fáil or any political party. It is ran by a group of independently appointed fund managers. The fund managers will not want to fuck this up because it’ll leave their careers in tatters and will hit performance pay.
Diversifying the reserve away from equities isn’t a bad idea given the shaky position of the global markets.
Have to say the NTMA & NPRF are exceptionally well run.
The NPRF currently has a very low exposure to property, which is ideal in this market. This was not something which was planned for. Its just that the property side of the NPRF took longer to set up then the other sectors. Sometimes luck really does smile down on you
I have full faith in the directors to make the right investment decisions.
Incidentially, please be aware, they are not looking for high yielding investments. As pension managers the focus is on risk i.e. as low as possible. So when you see the yield being low, please do not assume they do not know what they are doing. They do.
i.e. they’ll take whatever risk it takes to maximise their bonus.
Correct me if I am wrong but the NTMA does not actually manage the money - it manages the managers of the money. I used to work for a fund management company that got a nice chunk of the national pension fund money and the NTMA is very well regarded outside Ireland. The people who work there are in effect public servants and they do get paid well relative to most other government departments but they make a lot less then they would if they worked in the private sector.
I wonder is there indirect exposure to property. I remember hearing how Cork County Council funded its lavish headquarters refurb, it was a loan (90m I think) from the NPRF.
I suppose there’s nothing particularly wrong with this, and 90m for the NPRF is peanuts. If this was a bank lending the money it’d be considered property exposure, but I’m not sure if the NPRF consider it property exposure.
Now as far as I can see almost every local authority in the country has been spending big on their offices, I doubt Cork CoCo the only one to use the NPRF - though they might have had trouble borrowing from a normal bank - I seem to remember either they or Cork City Council flirted with bankruptcy a few years ago.
There is a mix.
They manage considerable amount of fixed income internally (as you would expect), they use equity managers (passive and various active), have an internal private equity team, investing directly in private equity funds (i.e. with PE managers) etc.
So they actually manage part of the cash themselves? Is this not just the national debt management part of their operation?
No. The NPRF is distinctly separate from the NTMA per se. The latter simply is the manager of the former and in theory could be replaced when their current appointment comes to an end. They hold a significant amount of bonds (c. 4-5bn), which they have the expertise to manage in house.
This is not an unusual situation. Much larger funds, such as the Harvard endowment operate in a similar way.