mast image

Special Report

Impact investing

Sections

PGGM tackles the hedge fund “dilemma”

NETHERLANDS - PGGM, the €77bn Dutch health care pension fund, has confronted the hedge fund "dilemma" head on in its latest quarterly report.

It asks the rhetorical question: ""Have pension funds lost their moral compass by investing in hedge funds?"

Announcing a third-quarter return on investments of 3.1%, the Zeist-based scheme sought to explain its position on hedge funds.

"Hedge funds have attracted negative publicity in recent months, brought on by those hedge funds which actively seek out what they consider to be undervalued companies and challenging the management," it said.

"We feel that this adverse publicity is exaggerated. There are good hedge funds and bad hedge funds, and some are more aggressive than others.

"The publicity has, however, served to highlight the dilemmas raised by pension funds investing in hedge funds, PGGM has a reputation to uphold as a responsible investor. Are hedge funds compatible with that role? We take the view that they are.

"The principles we apply as a reasonable investor also apply, of course, to our hedge fund investments.


"Those investments therefore are also judged against our criteria. This is not an easy task and we cannot guarantee that PGGM will never invest in hedge funds (or other asset classes) whose activities may at times conflict with those principles. In this case, too, there is no such thing as a risk-free return."

The fund invests €836m in hedge funds or just over 1% of its invested capital. It's made an average annual return on the asset class of 8.7% since 2003. It invests via fund of hedge funds, giving it exposure to more than 100 hedge funds.

The third-quarter return of 3.1% was driven by an 8.8% return on real estate and 4.8% on equities. Commodities had a negative return of 18.1%.

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
<