Dutch asset manager PGGM to lower investment costs for clients
NETHERLANDS - PGGM, the asset manager for the €118bn healthcare scheme PFZW, has said it will focus on lowering the investment costs for its six clients in the coming years.
According to Bob Rädecker, PGGM's public markets CIO, cost-cutting is one of the biggest challenges the asset manager currently faces.
"Research by CEM Benchmarking has made clear that internal asset management is cheaper, and we would like to prove that we are better at cost-cutting than external managers," he told IPE.
"Of course, we need to provide a quality that at least equates the performance of other market parties."
PGGM said it aimed to lower costs through direct investing in particular, rather than through fund-of-fund managers.
"This allows us to remove a layer of costs," Rädecker said.
Healthcare scheme PFZW reported that it had paid investment costs of 0.5% over 2010.
In Rädecker's opinion, PGGM's main challenge is to pilot the investment portfolios and balance sheets of its clients through the current crisis, "in a period of low growth and increased tail risk and counterparty risk".
He added: "We must make sure our clients have sufficient liquid assets to enable them to fulfil their daily commitments."
In the short term, Rädecker also sees the implementation of legislation, such as a revised financial assessment framework (FTK) and the clearing of OTC derivatives, as new focal points for the pension fund, he said.
He said PGGM was currently in touch with several pension funds that were considering handing over the management of their assets to PGGM.
"We don't limit ourselves to the care sector," he said, referring to the pension funds for architects and private security, which already contracted out their asset management - involving €3bn in total - to PGGM.
The pension fund for vicars ('Predikanten') has already joined PFZW, and the scheme for the cultural sector ('Cultuur') is to follow on 1 October.
PGGM is managing €122bn of assets in total.