AUSTRIA – Returns ahieved by Austria's Pensionskassen are widely dipersed despite similar levels of equity exposure, according to figures compiled by Mercer.
The divergence in returns came as the country's pension funds considered further diversification, fueled in part by calls for them to invest in affordable housing.
In 2012, all 17 Austrian Pensionskassen returned 8.4% on average, with the 11 company pension funds returning 9.23% and the multi-employer funds returned 8.28% according to the data from the banking service provider Österreichische Kontrollbank (Oekb).
The Pensionskassen currently offer 170 sub-portfolios based around the risk-appetite of their client – a number that is set to decline due to the country's new pension fund law.
As a result, funds have recently started reduce the number of sub-portfolios, integrating a life-cycle approach into those that remain.
Detailed data collected by Mercer Austria and seen by IPE, covering all multi-employer funds apart from VBV, shows significant differences between returns achieved by different multi-employer funds in sub-portfolios of the same risk level.
The best performer within the group of active portfolios – ones with an equity exposure of between 32% and 40% – was APK, returning 11.74%, followed by Allianz at 10.04%, while the Victoria Volksbanken's pension fund only managed a 6.9% return in the category.
Among the conservative portfolios, with an equity share of between 16% and 24%, Allianz returned 9.49% in one portfolio, but barely exceeded 6% in another. At Bonus the category's portfolios yielded 7.2% and 6.8%, respectively.
Meanwhile, defensive portfolios offered by Valida and Victoria Volksbankens returned 5.97% and 5.7%, respectively, while keeping the equity exposure below 16%.
Michaela Plank, principal at Mercer Austria, commented on the figures saying that 2012 was a "very difficult year" when it came to investing.
"Contrary to all expectations the bond side was also able to generate a good performance given the right positioning," she told IPE.
For 2013, Plank expected further inflows into corporate bonds, which have witnessed an increase in demand over 2012. However, she also predicted that Pensionskassen would move into equities faster than last year.
Adam Lessing, whose Fidelity Worldwide Investment has been building up its Austrian institutional business told IPE that high yield was "very interesting" and would remain so as part of the search for a stable income.
Lessing added that dividend yield was another strategy currently "selling well" in Austria – again as part of an income strategy some investors were now implementing, one that also comprised emerging market debt.
Pensions funds were less certain how to react to suggestions by the ruling conservative party ÖVP that the local Pensionskassen should invest in affordable housing.
Andreas Zakostelsky, head of the Austrian pension fund association FVPK, welcomed the idea saying safety in investments had gained in importance for pension funds and affordable housing was one topic fitting this risk-profile.
Günter Schiendl, CIO at the VBV Pensionskasse, however rejected the idea saying affordable housing would not yield high enough return for Pensionskassen and its members.