AUSTRIA – The ATS22bn (e1.6bn) Wien-based APK pensionskasse is changing investment tack following disappointing US equity returns, in a move which has led to the dropping of an unnamed active US blue chip equity manager in favour of an as yet undisclosed index fund provider.
The fund says it was not satisfied with the performance of the US equity manager, against its S&P500 benchmark.
And as a result of the equity market downturn, APK says it is looking away from a share driven strategy towards boosting corporate bond exposure.
The fund is also examining the possibility of adding global sector-based exchange traded funds to its portfolio.
“In the past, we have always tried to have a high proportion of equities in our overall portfolio, but as the market situation has turned out to be what it is, we have not further increased our equity portfolio for the moment,” says Günther Schiendl, head of investment at APK.
“Within our fixed income investments, government bonds are our biggest holding, alongside corporate, agency and bank bonds. We are increasing exposure to high quality corporates; probably we’ll do something in high-yield. So I would say that within fixed income we are by and large broadly diversified.”
Schiendl is looking forward to seeing a wider variety of exchange-traded funds (ETF) in the European market. “There are few available right now, but those are mainly focused on European indices and not yet on global indices, which is a development we would welcome. “ I think it will be a highly attractive tool. We have a fund that is very closely tracking European equity indices, so we’ll be interested in other regions of the world. A global sector ETF would also be of high interest.”
The latest change in Austrian investment regulations has given pension funds another investment tool: the index certificate. “They’re provided by banks, giving exposure to an index; pretty much like an index fund but the structure is not a fund, it’s a certificate.
“ Usually the provider keeps the dividend and gives you the return from the exposure. It’s convenient to trade because it can be traded like a share.”