Probability of Meeting the MAP Return

We have approximately assessed the future probability of meeting the required MAP Return (KPI 2). As recent years have highlighted, investment markets are volatile and therefore it should not be expected that the fund will deliver the required return year after year. The probability of the fund meeting the required return over varying time periods, based on our investment adviser’s capital market assumptions (at a point in time), is shown below:

Probability of meeting returns

Over the short to medium term, the above analysis shows that there is a c60-70% chance of meeting the required MAP Return. As the time period grows, the probability increases – the longer you hold higher risk assets, the more likely you are to achieve the long term target.

It is important for the NLF to continue to invest and target the required returns. This will ensure the best opportunity for the fund to be sufficient to pay for the costs of nuclear liabilities into the next century. For the reasons explained above, there may well be periods when target returns are not met – but the above outputs should give confidence that, based on the current investment strategy there is a reasonable probability of achieving the targets over the long life of the fund.