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Germany's BVK untroubled by peripheral European countries' woes

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  • Germany's BVK untroubled by peripheral European countries' woes

GERMANY - Germany's €53bn Bayerische Versorgungskammer (BVK) is not overly worried about a possible Greek default, as the pension fund has just 0.2% exposure to the beleaguered country.

What is more, the Versorgungswerk - a collective fund managing the first-pillar pension assets of self-employed professionals like doctors, lawyers or architects in the province of Bavaria - has no exposure to Italy or Spain, according to Daniel Just, head of asset management.

Exposure to Portugal, like Greece, is just 0.2%.

"We had added Greek and Portuguese government bonds in 2007 and 2008 as a further diversification to our portfolio, but never in large quantities," Just told IPE.

He added that, like other Versorgungswerke in Germany, his fund never had any vested interest in the region, unlike some banks with subsidiaries in Southern Europe.

In 2008, the fund got lucky when it made the tactical decision to sell off half of its Portugal exposure the day before the first downgrading took place.

All in all, the fund now holds around €116m in Greek and Portuguese debt each.

"Therefore," he said, "the primary risk of an uncontrolled insolvency is no big issue for us."

But recognised the danger of secondary effects on capital markets should such a scenario occur.

"Against this general uncertainty, I see a broad diversification as the only protection," he said.

Just has diversified the fund into sectors like timber, infrastructure and new forms of real estate investment.

The head of asset management said he was under no illusions about his fund "being hit" by further market turbulence, but he said he would continue to be "disciplined" and stick with his strategies.

One of these "philosophical convictions" was the hedging of currency exposures, Just said, as "our liabilities are in euros".

He said the fund might consider opening these hedges if necessary, but warned that it was very difficult to get the timing right with currencies.

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