mast image

Special Report

Impact investing

Sections

Interest hedge boosts returns at pension fund for cleaners

Related Categories

NETHERLANDS - The €2.4bn pension fund for the Dutch cleaning and window-cleaning sector reported a 10.7% return for 2011, with 7.9 percentage points resulting from a 60% hedge of the interest risks on liabilities.

The fund, however, saw its coverage ratio shrink from 107.7% to 99.1% due to falling long-term interest rates, the criterion for discounting liabilities, according to its annual report.

As a result, the scheme confirmed that rights cuts of 1.2% would occur on 1 April 2013 if it failed to increase funding to at least 104.6%.

The coverage ratio dropped further to 92.7% at the end of July, despite the pension fund’s raising its contribution from 18.5% to 21% of the pensionable salary.

After conducting an asset-liability management study, the pension fund said it decided to cut its equity allocation to just over 13% in favour of its fixed income portfolio (72.6%).

It increased the regional spread of its equity investments and boosted its allocation to emerging markets and other Asian countries at the expense of Europe and Japan.

It also further reduced its allocation to European government bonds in favour of mortgages, emerging market bonds and high-yield bonds.

The pension fund reported an 8.1% loss on its equity holdings and a 4.3% profit on its fixed income investments.

Both its liquid assets and alternative investments returned 5.9%, with infrastructure returning 9.3% following a re-rating to ‘fair value’ of its investments in UK funds, it said.

The cleaners scheme attributed 0.2 percentage points of its overall result to its currency hedge. 

An additional 0.25 percentage points was due to its dynamic asset allocation, it said.

The pension fund has almost 121,000 active participants, more than 368,500 deferred members and 13,165 pensioners, affiliated with almost 3,200 employers.

Related images

  • Interest hedge boosts returns at pension fund for cleaners

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-2555

    Asset class: Real Estate.
    Asset region: European.
    Size: EUR 50 - 100 million.
    Closing date: 2019-07-22.

  • 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
<