Metalworker schemes post strong returns despite Q4 slump
NETHERLANDS - The two industry-wide Dutch metalworker schemes, PMT and PME, reported negative returns of -0.4% and -3.2%, respectively, for the last quarter of 2010, as their fixed income investments declined due to rising interest rates.
However, both schemes delivered strong returns for the year. PMT returned 11.4%, while PME delivered 12.4%.
After accounting for the recent increase in life expectancy, both schemes ended the year with coverage ratios of 96%.
PMT reported its fixed income investments lost 4.1% for the quarter, resulting in a slight negative result of -0.4%.
The equity portfolio, by contrast, returned 10.6%, while the alternatives portfolio, which includes private equity, commodities and hedge funds, delivered 9.4% for the quarter.
Despite the "persisting malaise" in the property markets, real estate returned 3.6%.
PMT is the largest Dutch private sector fund, with more than 1m participants and assets of €37.3bn.
Year to date, PMT's equity portfolio delivered 20.3%, and 2010 also saw positive returns for fixed income (6.4%) property (9.7%) and alternatives (6%). Its assets in 2010 rose from €33bn to €37.3bn.
After adjusting the coverage ratio downward by 4% to account for longevity, PMT is ahead of the recovery plan it submitted to the Dutch central bank. It expects to raise its funding ratio - which now stands at 96% - to the required minimum of 105% in 2.5 years.
PME adjusted its coverage ratio by -4.5% to account for the increase in life expectancy to an end-of-year ratio of 96%.
The scheme reports being ahead of its recovery plan, which prescribes a return to its required minimum of 104.3% by 2013. PME serves 680,000 participants and has assets of €23bn.
The scheme's fixed income investments over the fourth quarter declined by 9.3%, while its equity investments returned 9.2%.
PME reported positive accumulated returns over 2010 for all asset classes, with equity returning 14.3%, fixed income 12.6%, property 2.8% and alternatives 4.4%.