The National Treasury Management Agency (NTMA) has committed the initial €6.3 billion pumped this week into two new sovereign wealth funds to low-risk bonds and cash, pending the establishment of a long-term investment strategy.
The NTMA outlined the interim investment strategy in publications on its website in recent days. The agency outlined that the funds will be permitted to be invested in government or government-guaranteed bonds issued by euro zone governments, so-called quasi-sovereign debt or cash. This followed consultation with Minister for Finance Jack Chambers and Minister for Public Expenditure Paschal Donohoe.
A spokesman for the NTMA said that the processes for appointing a head of the funds and finalising the investment committee, which will decide on a long-term investment strategy, are under way.
“We will be making further announcements in due course,” he said.
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The two new funds – the Future Ireland Fund (FIF) and Infrastructure, Climate and Nature Fund (ICNF) – have been set up with the aim of capturing and investing windfall tax revenues. The Government estimates that the bigger of the two funds, the FIF, which is being set up to pay for additional healthcare and pension costs associated with a growing and ageing population from 2041, will grow to €100 billion by 2035.
[ NTMA to put first €10bn in sovereign wealth funds into low-risk investmentsOpens in new window ]
The ICNF, seen growing to €14 billion by the end of this decade, is designed to ensure that capital spending on infrastructure and climate action projects is maintained in the event of a future economic shock.
On Tuesday, some €2 billion was transferred from the National Reserve Fund to the ICNF, the spokesman said. The following day, €4.3 billion, being the residual balance of the National Reserve Fund, was moved to the FIF, he said.
The NTMA said that it will align its investment strategy for both funds with existing environmental, social and governance (ESG) parameters set for the Ireland Strategic Investment Fund (ISIF), which it is also responsible for. This excludes investments in companies involved in the manufacture and testing of nuclear weapons or suppliers of critical components to that sector, high-carbon companies and tobacco groups.
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