13. Commitments
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 | 2016 Notional Principal €m |
2016 Unrealised gain / (loss) €m |
2015 Notional Principal €m |
2015 Unrealised (loss) €m |
|---|---|---|---|---|
| Foreign exchange contracts | 799 | (31) | 1,614 | 2 |
Investment managers |
||||
| Foreign exchange contracts | 2,110 | (15) | 18 | (0) |
| Futures contracts | 1,973 | 9 | 471 | (1) |
| (37) | 1 |
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 year 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.
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 31 December 2016, the outstanding commitments totalled €1.4bn (2015: €1.2bn).
The Fund has entered into commitments in respect of certain types of investments as outlined below.
| Time-frame of commitment Years |
2016 €m |
2015 €m |
|
|---|---|---|---|
| Total unquoted investments | 0-9 | 866 | 965 |
| Total loans and receivables | 0-2 | 527 | 248 |
| Total uncalled commitments | 1,393 | 1,213 |
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 as at 31 December 2016, the Discretionary Portfolio was predominantly invested in readily realisable assets.