NETHERLANDS – Europe’s largest pension fund, Stichting Pensioenfonds ABP, has announced that it made a total return on investment of 6.9% in the second quarter - boosted by rises in equities and alternatives.
The figures are a return to positive territory following a two percent decline in the first quarter and take the civil service fund’s capital value to 142 billion euros, from 133 billion euros at the end of the first quarter.
The fund’s coverage ratio, a live issue following comments from the regulator, has risen to 104% from 99%. The Pensioen-& Verzekeringskamer, or PVK, caused outrage in the Dutch pension industry with a requirement that pension funds have a coverage ratio of at least 105%.
ABP’s equities portfolio rose 14% in the second quarter, which compares to a 9.9% decline in the first quarter. Fixed income returned 2.6%, compared to a two percent return earlier. Alternatives rose 8.2%, against a 1.1% decline previously.
Equities now account for 32% of the fund’s assets, up from 29%, while fixed income is down to 51% from 54%. Alternatives are steady at 17% of the portfolio.
“After the very disappointing first quarter with a share return of -10% and total return of minus two percent, the second quarter showed a strong recovery,” ABP said.
It said the quick resolution of the Iraq war removed uncertainty and improved sentiment. Investment director Jean Frijns said the markets were still uncertain and that the economic situation is still not good in the US and Europe.
ABP has submitted a recovery plan to the PVK, under which it proposes to cut indexation and raise contributions.