NETHERLANDS - Arcadis, the €617m pension fund for civil engineers, has appointed Delta Lloyd as manager of its €97m portfolio of government bonds, as part of a larger revamp to its asset allocation strategy.
Officials said the step follows the scheme's decision to hire Altis Investment Management as its fiduciary adviser, after a disappointing performance from several asset managers.
Altis had been tasked with assisting in portfolio construction and monitoring the style consistency of its asset managers, the quality of their performance as well as the portfolio's risk-return ratio.
Arcadis' portfolio of government bonds had until now been managed by Robeco Asset Management. But in a bid to spread its risks on equity investments, the scheme has replaced one of the two mandates with Robeco and replaced a sole mandate held by Russell Investments with nine new mandates, said Rob Schippers, Arcadis' controller and risk manager.
He said six mandates have been placed with regional players, and one of the three global mandates is a passive allocation managed by Barclays Global Investors.
Schippers also said Arcadis' 2.8% hedge funds allocation, which returned -16.8% last year, is being liquidated and assets are to be reinvested.
The pension fund reported returns on investments of -13.3% last year as it made a loss of 46.3% on its 27.8% equity allocation, but gained a 17.3% return on a 43.1% fixed income allocation, thanks largely to a 50% interest hedge through ‘swaptions'.
That said, based on the advice of Watson Wyatt's structured solutions team, the scheme has decided to fine tune its interest rate hedge by increasing the number of swaptions from one to six, indicated Schippers.
The Arcadis pensioenfond also said its property investments yielded a negative return of -12.9%.
Because of the volatility of the markets - during the last quarter of 2008 in particular - the pension fund said it had limited the rebalancing of its asset mix to decreasing its equity portfolio to the lower limit of the set bandwidth.
The civil engineers' fund has a cover ratio of approximately 103% at present and has started implementing a five-year recovery plan. The scheme has 7,250 participants.