The legislation states that the purpose of the FIF “shall be to support, in a consistent and sustainable manner, State expenditure in 2041 or any year thereafter”.
Essentially, the FIF is a long-term savings fund which is intended to grow over time, and to remain locked away until at least 2041. The NTMA will invest and manage the Fund on a commercial basis to seek optimal financial return such that the capital of the Fund, and any investment return earned, is available to be withdrawn by the Government from 2041 onwards. Once withdrawn, it will be a matter for the Government to decide how that money is spent by the Exchequer.
The FIF received an initial transfer of €4.3 billion in September 2024 from the dissolution of the National Reserve Fund, and received an additional €4.1 billion (0.8% of GDP) in October 2024. In total in 2024, approximately €8.4 billion has been contributed to the FIF.
Each year until 2035, the Government will contribute 0.8% of GDP to the FIF. The amount of those payments will depend on Ireland’s GDP over the intervening years, and under certain assumptions they may amount to up to c.€65 billion by 2035.
In the event of significant deterioration in the public finances, the Minister may seek to reduce the amount payable to the FIF in any given year. The Minister may also opt to increase the payment in a given year.
The long-term investment strategy for the FIF has yet to be finalised, and remains subject to NTMA approval and Ministerial consultation. However it is expected that the FIF will initially be invested in liquid public markets, and over time may seek to diversify a portion of the funds into illiquid private assets.
The FIF is expected to invest globally across equity and bond markets to seek optimal financial return, and is unlikely to have a major domestic focus in Ireland.
Pending approval and implementation of the long-term investment strategy, the FIF is being managed by the NTMA under an interim investment strategy which reflects a low risk appetite, permitting only highly-rated liquid sovereign and quasi-sovereign bonds.
The FIF Investment Strategy is published on the NTMA website here.
No withdrawals from the FIF are permitted until 2041 at the earliest. From 2041 onwards, the Government may opt to withdraw up to 3% (or up to 5% in certain circumstances) of the FIF’s value each year.
Once money is withdrawn from the fund, it will be a matter for the Government to decide how that money is spent by the Exchequer.
ISIF has its own unique mandate to invest on a commercial basis to support economic activity and employment in Ireland. ISIF focusses its efforts on making transformational investments across its impact themes of Climate, Housing and Enabling Investments, Scaling Indigenous Businesses, and Food and Agriculture.
The FIF and ICNF each have their own mandates to invest on a commercial basis to secure the optimal total financial return. They do not share ISIF’s “double bottom line” mandate to support economic activity and employment in Ireland. Therefore the FIF and ICNF are expected to retain more of a global focus than ISIF, and while there is potential for some limited overlap in certain asset classes, they are expected to pursue different investment strategies.
A new dedicated business unit for the Future Ireland Funds is being established within the NTMA, to be led by its own Director and resourced by its own team. The process is ongoing to recruit the Director and the initial team members, and it is expected that the team will continue to grow over the coming years.
There are expected to be certain synergies between the Future Ireland Funds and ISIF in terms of expertise and operational capability which will be leveraged by the NTMA to ensure efficient operation and close collaboration between both business units.
The Future Ireland Funds will also benefit from the shared services provided by the NTMA including Finance, Legal, Compliance, Risk, ICT, Communications, People, Internal Audit, Procurement and other functions.
The NTMA engages third party investment managers to facilitate access to global diversification and the widest possible range of asset classes and investment opportunities. This approach allows the assets of each fund to be invested globally across a number of asset classes/strategies and regions to enhance the diversification and liquidity of the portfolio, so that there is no excessive concentration in one company, sector or country driving the risk and returns of the portfolio.
It is expected that the FIF and ICNF will rely primarily on external investment managers, however the model remains subject to review and there may be scope for certain investment activities to be undertaken in-house as capabilities and capacity allow.
The Interim Investment Strategies for both funds are being managed by the NTMA internally.
The NTMA is the manager and controller of the FIF and ICNF, and the Agency (i.e. Board) is responsible for all aspects of the management of the funds, including the determination of the relevant investment strategies. The Agency expects to appoint a new Investment Committee, comprising Agency members and external experts, to assist in the oversight of both the FIF and the ICNF.
In addition, investment strategies for both the FIF and the ICNF are subject to consultation with the Minister for Finance and the Minister for Public Expenditure, National Development Plan Delivery and Reform, and the Minister for Finance shall consult with such other Ministers as he/she considers appropriate.
The NTMA endeavours to be a responsible investor, actively integrating ESG matters into its decision-making processes with a view to enhancing the overall outcomes for the Fund and ultimately for the State.
The NTMA is acutely conscious of the importance of investing public money in a responsible and sustainable manner – and of the importance of demonstrating this to the public and its other stakeholders.
The NTMA envisages that ESG risks, including individual investment decisions, will be considered through a comprehensive Sustainability and Responsible Investment Framework (SRIF) that will be designed to take account of the specific circumstances and objectives of each fund.
In developing the SRIF, it will be a requirement for the NTMA to consult with the Minister for Finance and the Minister for Public Expenditure, National Development Plan Delivery and Reform, and the Minister for Finance shall consult with such other Ministers as he/she considers appropriate.
There are a number of industries in which the FIF, ICNF and ISIF do not invest. The NTMA aims for exclusions to be limited in number and are in effect a “last resort” approach to responsible investment when other avenues are inappropriate or are deemed to be ineffective.
The exclusion of certain categories of investment is mandated by legislation, including investment in fossil fuel undertakings, cluster munitions and anti-personnel mines, coal production and processing, and tobacco manufacturing. Other non-statutory exclusions that also apply include the manufacture and testing of nuclear weapons.