13. Commitments
Ireland Strategic Investment Fund
13.1 Foreign currency and futures commitments
The notional principal and unrealised gain / (loss) of currency derivative contracts entered into by the Manager and investment managers on behalf of the Fund was:
| NTMA | 2015 Notional Principal €m |
2015 Unrealised gain/(loss) €m |
2014 Notional Principal €m |
2014 Unrealised (loss) €m |
|---|---|---|---|---|
| Foreign exchange contracts | 1,614 | 2 | 1,546 | (47) |
| Investment Managers | ||||
| Foreign Exchange contracts | 18 | (0) | - | - |
| Financial futures | 471 | (1) | 525 | (6) |
| 1 | (53) |
Foreign exchange contracts
The Fund follows a policy of hedging its foreign currency risk, using forward foreign exchange contracts and cross currency swaps.
The Fund’s investment managers are not required to hedge currency exposure. They are permitted to carry out spot and foreign exchange contracts in order to satisfy the settlement of securities transactions, and to manage their portfolios solely in line with the Statement of Investment Objectives and Restrictions agreed with the Fund.
The notional value represents the total contracted foreign exchange contracts outstanding at the period end.
Financial futures
The Fund’s investment managers are permitted to execute futures contracts solely in line with the Statement of Investment Objectives and Restrictions agreed with the Fund.
As part of the Fund’s Capital Preservation Strategy, short equity futures were entered into to reduce the overall equity exposure.
13.2 Uncalled investment commitments
The Fund has entered into commitments related to the funding of investments. These commitments are generally payable on demand based on the funding needs of the investment subject to the terms and conditions of each agreement. As at December 31, 2015, the outstanding commitments totalled €1.2bn (2014: €820m).
The Fund has entered into commitments in respect of certain types of investments as outlined below.
| Time-frame of commitment Years |
2015 nominal €m |
2014 nominal €m |
|
|---|---|---|---|
| Total unquoted investments | 0-9 | 965 | 750 |
| Total loans and receivables | 0-2 | 248 | 70 |
| Total uncalled commitments | 1,213 | 820 |
Funding of Commitment
The Agency seeks to manage the Fund to ensure that it will always have sufficient liquidity, without omitting attractive investment opportunities, to fund its commitments as they are called.
The NTMA Liquidity Risk Management Policy is applicable to the Fund. This Policy sets out the minimum acceptable standards to be adhered to by those responsible for treasury transactions which give rise to liquidity risk within the NTMA.
The Fund is not subject to externally imposed capital requirements and was at 31 December 2015 predominantly invested in readily realisable assets.