Investments in AIB, Bank of Ireland weigh on assets
Ireland Strategic Investment Fund, Dublin, returned 2.9% in 2016, driven by the outsourced portion of the portfolio, the Irish sovereign wealth fund said in an annual report.
Over the year, the fund's combined assets under management fell 4% to €21 billion ($22.1 billion) from €21.85 billion.
In the "discretionary part" of the Irish reserve fund's portfolio, the fixed-income assets stood at €3.6 billion as of Dec. 31, up from €1.57 billion a year earlier. The fund had €1.97 billion in absolute-return strategies at the end of last year compared with €302 million a year earlier. At the end of 2016, the fund had some €740 million invested in cash, down from €3.6 billion a year earlier. Private equity investment increased in the period to €517 million from €461 million, while real estate decreased to €248 million from €271 million and infrastructure decreased to €206 million from €367 million. Equity allocation was €791 million last year, down from €1 billion a year earlier.
During the financial crisis, a total of €20.7 billion was invested by the National Pensions Reserve Fund in AIB and Bank of Ireland by the Ministry of Finance. These assets, as the "directed part of the portfolio," were transferred to the ISIF when it was established in 2014. At the end of 2016, the directed portfolio had a valuation of €12.9 billion. Its return in 2016 was -7.9%.
ISIF's investment management fees increased to €10 million from €3 million in 2016, according to the fund's report.