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BVV pursues new real estate strategy, aims to expand EM exposure

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GERMANY – Germany’s largest Pensionskasse, the €23bn BVV, has said its new infrastructure and real estate strategy is “on track” and confirmed plans to increase exposure to emerging markets.

In November last year, Rainer Jakubowski, board member at the banking pension fund, first informed IPE of the globalisation of the real estate portfolio.

Now he has confirmed that the first purchase under the new strategy “happens to be an office building in Australia”.

He declined to provide further details but confirmed that the BVV had chosen four new managers to implement the strategy, with three having a global mandate and the fourth “a more opportunistic one”.

“The infrastructure for the new strategy is up and running, and we will start investing bit by bit,” Jakubowski said.

According to the BVV’s annual report for 2012 (in German), the fund is also planning to increase its exposure to emerging markets.

Jakubowski noted that the BVV had decided on managers for this strategy “some time ago”, with three managers having been appointed for emerging market debt, two for equities in Latin America and one for Asian equities.

“Maybe we will go looking for a second Asian equities manager at some point – but not right away,” he said.

Jakubowski declined to specify which regions the pension fund was targeting, saying that it was merely “looking for market opportunities wherever they appeared”.

He also declined to clarify the pension fund’s current emerging market exposure – currently “between 5% and 10%” – or its future strategic target, as “this all depends on the market situation and opportunities, which are practically changing daily”.

However, he said he was convinced the size of the allocation would increase slowly in the coming years, as a new “dynamic view of the world” was applied, with emerging markets reporting less debt, more economic growth, fewer demographic challenges and better rating tendencies than more established markets.

But he said new investments in many emerging markets were still “difficult”, as they had been “shaken along with the dollar”.

“But then again,” he added, “you can never speak about the ‘emerging markets’ in general.”

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