NETHERLANDS – Hit by falling stock markets, Europe’s largest pension fund, the Dutch civil servants’ ABP, has posted a 7.2% decline in its capital value to 135.5 billion euros – though it sees no reason to change its investment strategy.

Stichting Pensioenfonds ABP said in a statement that it recorded a 7.2% decline in its investments in 2002, taking its capital value to 135.5 billion euros, down from 147 billion euros a year earlier.

But there was a slight improvement in the fourth quarter, with a rise of 2.2%.

ABP’s investment director, Jean Frijns, noting three consecutive years of falling markets, said: “The big movements on the stock markets are no reason for us to change our investment strategy,” he said. He added that ABP has a broad portfolio.

“The risks of falling equity markets are contained as we do not automatically buy more to compensate for market falls.” He said the fund held 29% of its assets in stocks are the end of 2002. This compares to a 49% share at the end of 2001, according to an ABP newsletter.

“We believe that in the long term equities ill outperform fixed income,” Frijns said, adding that ABP feels bonds are overvalued at the moment.

He said that, after a cyclical readjustment, equities will moderately outperform bonds/debt in the medium term.

ABP also said that its cover ratio has declined to 103% as at the end of 2002, from 122% a year earlier.