Irish SWF: Died Nov 2010 aged 9
National Pensions Reserve Fund, born April 2001, died November 28th, 2010; survived by a sister, Nama.
But it never lived to fill this purpose. The 25-billion euro NPRF, which boasts its membership to the world’s elite SWF club, has died a sudden death although it has been suffering a capital haemorrhage last year, when the government amended the rule and used 7 billion euros to recapitalise its battered banks. The grim fate of NPRF also raised concerns about the viability of long-term capital: after all, sovereign wealth funds were billed as a provider of global financial stability as they invest in risky assets in the long-term.
“From its birth, however, there were fears that the fund would flirt with potentially disastrous investments, such as dotcoms, which were fashionable at that time. Indeed, the decision to require the fund’s managers to engage in stock-picking rather than simply acting as a passive “index fund” tracking the whole investment market served to push up costs,” the paper wrote.
“The State’s distinct lack of an ethical investment policy also proved controversial – tobacco vendors Philip Morris, Imperial Tobacco and British American Tobacco; cluster bomb makers such as Lockheed Martin, Raytheon and Thales; and Iraq war profiteer Halliburton were among its hottest stock picks.”
The NPRF suffered a fatal blow on November 28 when the government directed around 10 billion euros of the fund’s capital to prop up “black hole” banks.
“The demographic pensions “time-bomb”, which will see the ratio of workers to pensioners shift from five-to-one to two-to-one by the middle of the century, continues to tick as before,” it said.
Its “sister” NAMA (National Asset Management Agency) will have busy days ahead.