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US Stock Prices Key to Irish National Pension Fund Sales By Emmet Oliver, Irish Independent
Plans
by the National Pension Reserve Fund to sell down its huge shareholdings
could be significantly hurt by any downturn in the The
pension fund must sell off its equities and liquidate its cash resources
as part of plans to include €17bn of Irish funds in the IMF/EU €85bn
rescue fund. US
equity markets have been buoyed in the second half of 2010 by so-called
quantitive easing two (or QE2), but some analysts believe the equity
market has gone ahead of economic fundamentals and may experience a
significant correction. Much
of the fund's stocks are in the S&P 500, which is up 6pc so far this
year, with many analysts expecting a correction in the early part of next
year. The
success of the fund's sales will also heavily depend on the performance of
the French market, which makes up 7.8pc of the pension fund's
discretionary portfolio. The
Irish stock market is almost irrelevant to the fund, making up just 0.3pc
of the discretionary portfolio, although the main companies the fund holds
are CRH, Ryanair and Kerry Group. The
pension fund will keep its private equity and property portfolios as
leaving these at this point could incur penalty charges. Some of these
funds are so-called closed funds, meaning that shares in the funds are not
easily translated into cash until the fund matures. The
fund has a low exposure-- based on end of 2009 figures -- to emerging
markets and also does not short most stocks. This
means that any correction in the main The
fund has been undergoing a change in its investment approach recently,
looking for a higher return. It
has adopted some of the trading strategies normally used by hedge funds.
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