mast image

Special Report

Impact investing

Sections

Dutch telecoms fund slashes equity holdings

NETHERLANDS- Dutch telecoms pension fund KPN has cut its equity investments substantially for the second time this year in a move that takes its holding in the asset class below 30%, down from 56% at the end of 2001.

Last year coverage levels at the e3bn fund dropped to 125% and in January the board decided to cut equity investment from a total of 56% to 46% and to put the proceeds into fixed income in an attempt to stem the fall.

Hans Hokke, managing director of TKP, the company managing the scheme, says the trustees had set up a contingency plan to switch between equities and fixed income.

“What we said was that if stock markets suffered a third year of negative returns then perhaps it would be sensible to come up with some contingency plan where would decide in advance what to do on reaching a certain coverage level.

“We planed to cut the fund’s equity investments further if coverage fell below 110%. This happened at the end of June so we reduced our equities a further 15%,” he says.

Falling equity prices have helped to draw down coverage levels further and following the readjustment and market fluctuations the fund has around 60% in fixed income, 12% in real estate and 28% in equities.

Hokke says they are likely to move back into the market at some stage but that since coverage remains below 110% it is unlikely to be in the foreseeable future.

KPN sold across a spectrum of equities opposed to targeting specific sectors or regions. “So far the policy has turned out to be successful for the fund,” says Hokke

Last year in the UK the e3.7bn pension fund of retailers Boots sold its entire equity and short term bond investments in favour of sterling long-dated fixed rate bonds in a shift it maintained would save £10m per annum in management fees.



Have your say

You must sign in to make a comment

IPE QUEST

Your first step in manager selection...

IPE Quest is a manager search facility that connects institutional investors and asset managers.

  • QN-2548

    Asset class: Fixed Income, Emerging Market Debt Hard Currency (Active).
    Asset region: Emerging Markets.
    Size: CHF 300-400m.
    Closing date: 2019-07-30.

  • QN-2549

    Asset class: Fixed Income, Emerging Market Debt Hard Currency (Passive or Passive Enhanced).
    Asset region: Emerging Markets.
    Size: CHF 300-700m.
    Closing date: 2019-07-30.

  • QN-2550

    Asset class: Fixed Income, Emerging Market Debt Local Currency (Active).
    Asset region: Emerging Markets.
    Size: CHF 250-350m.
    Closing date: 2019-07-31.

  • QN-2551

    Asset class: Fixed Income, Emerging Market Debt Local Currency (Passive or Passive Enhanced).
    Asset region: Emerging Markets.
    Size: CHF 250-350m.
    Closing date: 2019-07-31.

  • QN-2552

    Asset class: Fixed Income, High Yield (Active).
    Asset region: High Yield (US).
    Size: CHF 500-600m.
    Closing date: 2019-07-29.

  • QN-2553

    Asset class: Fixed Income, High Yield (Passive or Passive Enhanced).
    Asset region: High Yield (US).
    Size: CHF 500-1'100m.
    Closing date: 2019-07-29.

  • QN-2554

    Asset class: Global Real Estate (Equity, unlisted Funds).
    Asset region: World (ex-Switzerland).
    Size: CHF 200 mn (potential for further growth).
    Closing date: 2019-08-07.

  • QN-2556

    Asset class: FX Hedging.
    Asset region: Global.
    Size: Mandate size of CHF 1.5 bn.
    Closing date: 2019-08-09.

  • QN-2557

    Asset class: All/large Cap Equities.
    Asset region: China A-shares.
    Size: Unit linked platform (0m USD in initial investment).
    Closing date: 2019-08-01.

Begin Your Search Here
<