NETHERLANDS - TNO, the €2bn pension fund of the applied scientific research institute, has appointed investment management firm BlackRock as its fiduciary manager.
BlackRock will primarily act as lead overlay risk manager for the scheme, taking on a strategic advisory role and will be responsible for the interest rate and inflation matching and currency, the firm said.
BlackRock will also manage TNO's fixed income portfolio and the global tactical asset allocation overlay, it added.
The TNO pension fund will continue to manage and select managers for its equity and alternative investment portfolios but BlackRock will support the scheme's staff in the risk management and reporting process of the external managers' portfolio, it has made clear.
The TNO scheme runs pension plans for 14,000 participants in total, not only for TN) but for other employers in its sector too.
The pension fund reported a return on investments of 11.3% in 2006, and 4% during the first-half of this year while its funding ratio in June was 147%.
Besides investing in the traditional asset classes of equity (37.8%) and fixed income (35.2%), the TNO scheme has invested 3.5% of its assets in hedge funds, 6.5% in private equity and 11.6% in property. Private equity and real estate returned 29.2% and 33.6% last year respectively.
The scheme has also invested in long-term government bonds to decrease the interest exposure of its fixed income portfolio and at the end of 2006, it had hedged 31% of its pensions liabilities, TNO said.
"BlackRock has the investment solutions and risk management systems we require, and has an excellent track record in fixed-income securities and LDI solutions. This, combined with its flexibility and client-oriented approach, has led to us selecting the company," Joop Ruijgrok, chief executive of TNO Pension Fund explained.
"This customised mandate has a clear division of roles between BlackRock and the TNO scheme. Such a structure is probably unique in the Netherlands," Andre van den Heuvel, BlackRock's Benelux' head of institutional sales, added.
The TNO Pension Fund was supervised in its selection process for a lead overlay and risk manager by consultant Paul Boerboom from Avida International BV.