The Irish Association of Pension Funds (IAPF) has launched a consultation on proposals to establish an Ireland-focused long-term investment fund designed to channel pension and other long-term capital into a diversified portfolio of productive assets.

The discussion paper from the IAPF’s Investment Committee, authored by Thomas Donohoe, Noel Friel and Gerald Fitzgerald, set out a proposed return-led investment vehicle aimed at generating long-term real returns with resilience to inflation.

Ireland would be the “natural originating universe”, but capital should be allocated on a “commercially disciplined basis”, with broader European exposure used where appropriate.

The IAPF said the proposal should be viewed in the context of wider changes to long-term savings and investment across Ireland and Europe, including the European Union's Savings and Investment Union (SIU) initiative and the planned introduction of Personal Investment Accounts in Ireland, which could strengthen the case for directing more long-term capital towards productive investments.

The current illustrative strategic asset allocation comprises 40 per cent equities, 35 per cent real assets, 20 per cent debt, and 5 per cent liquidity and inflation-linked bonds. However, the paper noted that this is intended as a framework for consultation rather than a final specification.

The preferred structure would be a European Long-Term Investment Fund (ELTIF), reflecting both the long-duration and partially illiquid nature of the intended portfolio and the benefit of a recognised European long-term investment framework.

While the vehicle could support regular, potentially daily, net asset value calculations for pension administration and reporting purposes, the paper noted that it would not be designed to offer daily liquidity because of its significant allocation to illiquid assets.

The consultation is seeking views from industry stakeholders on the proposed investment objectives, asset allocation, governance arrangements, pricing and liquidity terms, and whether an ELTIF is the most appropriate vehicle for the strategy.

The paper concluded that its purpose is to support industry discussion, surface implementation issues early, and assess whether the concept can be developed into a structure that is “investable, scalable and institutionally robust”.

It said the central question is not whether the idea is attractive but whether it can be made “sufficiently practical, credible and well-structured for long-duration pension capital”.

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