The legislation states that the purpose of the ICNF “shall be to support State expenditure:
(a) in 2026 or any year thereafter, where there has been, or is likely to be in the
subsequent year, a significant deterioration in the economic or fiscal position of
the State, and
(b) in each of the years 2026 to 2030, on designated environmental projects.”
What this means in practice is that the NTMA will invest the Fund in assets such that the capital of the Fund, and any investment return earned, is available to be withdrawn by the State to fund expenditure including on climate and nature projects. The Fund itself will not invest directly in infrastructure or climate and nature projects.
Each year from 2024 until 2030, the Government will contribute €2 billion to the ICNF. Therefore, contributions are expected to total €14 billion over the period 2024 - 2030, after which they will be reviewed.
In the event of significant deterioration in the public finances, the Minister may seek to reduce the amount payable to the ICNF in any given year. The Minister may also opt to increase the payment in a given year.
The ICNF was initially managed under an interim investment strategy reflecting a low-risk appetite, with investments limited to cash, and highly-rated, liquid sovereign and quasi-sovereign bonds.
Following Ministerial consultation and NTMA approval, a long term investment strategy has been established. The long term strategy has a reference portfolio consisting of 100% global public fixed income.
Over time, the Fund’s expected long term asset allocation comprises:
Public low-risk debt and cash – 90%
Public high-risk debt – 10%
Given the purpose of the ICNF is to ensure funds are available to be withdrawn in the event of a downturn, and to fund designated environmental projects, it is appropriate that the ICNF will invest primarily in low-risk liquid assets. Therefore, the ICNF is not expected to invest directly in infrastructure and environmental projects – the fund is intended to be available to be withdrawn by the Government to fund relevant expenditure, including on relevant environmental projects.
Up to €3.15 billion will be specifically available to support designated environmental projects from 2026 to 2030.
The ICNF Long Term Investment Strategy is published on the NTMA website at here.
For designated environmental projects, the Government may withdraw up to 22.5% of the fund each year from 2026 to 2030 (subject to an overall cap of €3.15 billion).
Where there is significant deterioration in the public finances, the Government may withdraw up to 25% of the fund in a given 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 has been established within the NTMA.
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 is scope for certain investment activities to be undertaken in-house as capabilities and capacity allow.
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 has appointed a Future Ireland Funds Investment Committee, comprising of six members with relevant international expertise, including two Agency members, 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 following five principles guide the ESG approach taken by the NTMA in relation to the FIF and ICNF:
The NTMA invests sustainably in a manner that meets the needs of the present without compromising the ability of future generations to do the same.
The NTMA is a universal owner and therefore thinks long term to deliver sustainable returns. This requires the consideration of systemic risks, such as Climate Change.
The NTMA acknowledges that risks associated with ESG matters will vary across asset classes, sectors, and companies and therefore across funds.
The NTMA will endeavour to choose the most effective instrument to realise positive ESG change in seeking to create value and/or reduce risk over the long term in its stewardship of the funds.
The NTMA is transparent and accountable with respect to its approach to ESG.
The Long Term investment strategies for the FIF and ICNF include the ESG Approach applicable to the Funds, detailing how the Agency has regard to any risk to the assets of the Funds posed by ESG matters of relevance to the investment policy.
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. A small number of discretionary exclusions have also been identified, namely individual companies that fall in one or more of the following categories:
• Companies involved in the manufacturing/processing of tobacco.
• High carbon companies (coal processors and oil sands).
• Companies involved in the testing and/or manufacturing of nuclear weapons (or their component parts).
• Certain companies listed on the United Nations database of business enterprises involved in specified activities in the Occupied Palestinian Territories.