THE €22bn National Pension Reserve Fund (NRPF) plans to review its investment in hedge funds.

The NPRF has begun a tender process seeking consultants to advise it on "the difficulties that arose for funds of hedge funds in 2008 and on why they continued to underperform the general hedge fund industry in 2009".

A fund of funds invests in a portfolio of hedge fund managers in a bid to maximise gains.

Hedge funds suffered their worst year on record in 2008, though they did rebound 19% last year, according to EurekaHedge, which tracks their performance. That increase was still below the gains in most major world stockmarkets.

The NRPF plans to invest up to €500m in funds of hedge funds.

The tender document said the consultants will advise the NPRF on the number of funds that should receive an allocation of NPRF money and provide advice on investment strategy.