AUSTRIA - The smallest of the Austrian multi-employer pension funds is upping its sustainability investments in a year which the new chairman at Bonus Pensionskasse, Peter Deutsch, describes as 'rather dark'.
Bonus, the €250m two-times IPE award winner, has not altered its strategic asset allocation in the turbulent markets but has made adjustents "within the tactical margins" including lowering the equity exposure and investing new inflows in money market instruments, Deutsch explained to IPE.
To improve this year's performance Bonus decided to increase its focus on sustainable investments by adding further micro finance and climate change funds to the portfolio.
Deutsch added the board decided against investing in commodities because of the fund's sustainability approach.
"We knew that by investing, for example, in food crops we would contribute to price increases, therefore we decided against it."
Member of the board Georg Daurer added the fund is constantly evaluating the term 'sustainability' as the notion of what is sustainable changes constantly with new insights and findings.
Another instrument used by the fund in order to boost returns was dividend funds, which were largely uncorrelated to the equity markets as companies with high dividends stayed in demand but were not affected as badly as other stocks.
However, Deutsch does not expect more than one of the seven member portfolios of varying risk parameters and asset allocations to yield a positive return by the end of the year.
Daurer added it was stil impossible to give a year-end prognosis as markets are still very volatile and percentage points can be lost and gained within days.
"This year definitely is one of the darker ones for the Pensionskassen but it is only a small period in the whole long-term system," noted the chairman who took over from Markus Zeilinger earlier this year. (See earlier IPE article: Bonus appoints new head)
He added Austrian Pensionskassen had managed an average return of 6.8% annually over the last five years while a new study by Mercer Austria revealed Pensionskassen "bear comparison with other European pension funds".
Pensionskassen have recently been under fire again as the labour ministry revealed certain pensioners are facing pension cuts because of the market turbulences.
The Pensionskassen members affected include those who had been transferred by companies in the early 1990s when it was still possible to put a calculation rate for pension payouts (Rechnungszins) of up to 6.5% in the contracts but later saw the rate for new contracts capped at 3.5% after re-evaluating market expectations.
Deutsch noted discussions concerning this subject have frequently arisen, especially with Austrian elections being held in three weeks' time
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