The National Pensions Reserve Fund (NPRF) was worth just over €10 billion at the end of March after delivering a return of 2.7 per cent in the first quarter.

The fund, set up three years ago to help provide for Ireland's pension costs from 2025, earned €268 million in the first three months of the year but lagged behind the average managed Irish pension fund, which returned 3.8 per cent over the same period.

This was due to its heavier exposure to equities, which took a dive in March, its lack of property exposure, its longer time scale and its more international mix of investments, according to Mr John Corrigan of the NPRF.

The fund currently has around 78 per cent of its assets in equities, just below its target of 80 per cent, having invested a further €597 million in shares in the first quarter.

It holds a further 14 per cent in bonds and 8 per cent in cash and is now looking to invest in property. According to the fund's chairman, Mr Donal Geaney, it is currently considering the best approach to take to property investment for the long term.

It has decided to allocate 4 per cent of its assets to the sector but will invest indirectly in property rather than buying buildings. It is seeking to hire one or two specialists with expertise in the area to oversee its investment in key property markets around the world.

Meanwhile, the €200 million the NPRF has earmarked for investment in public-private partnerships (PPPs) has yet to find a home 18 months after the fund first signalled its interest in becoming involved in the area.

"Hopefully, we will get that moving. There are plenty of infrastructure projects to get done," Mr Geaney said.

The NPRF is currently selecting fund managers to run two new mandates - small cap equities and corporate bonds - and hopes to make a decision on the issue next month. It has made an initial allocation of 2 per cent of the fund to small cap equities and 2 per cent to corporate bonds.

It also remains keen on expanding into the private equity arena but, as with property, needs to recruit specialists to oversee its investment strategy in the area.

Since it was set up three years ago, the NPRF has only dropped one of the fund managers appointed to invest its money, US-based Blackrock, which was running a pan-European equity portfolio. It has since been replaced with another US firm, Boston-based fund manager Oechsle International.

The first quarter's 2.7 per cent gain comes on top of a return on investments of 12.8 per cent last year, which saw the fund move back into the black after a difficult start. Fees and expenses incurred in operating the fund last year were €14 million, including investment manager fees.

According to Mr Corrigan, if the fund were liquidated tomorrow, the Exchequer would be €560 million better off .

The fund receives contributions worth 1 per cent of GNP each year.