So good-bye to the new normal (not even adieu) and hello again to old normal. Well, sort of. Marketing seems to be back on the agenda for all those asset managers with such wonderful alpha-producing track records, and of course for all the beta players too. But we are taking beta blockers here at Wasserdicht Pensioenfonds - it’s the A-class performance we want. Except in Germany.

In Germany things are different. At the meeting of our Pensionskasse with Hans and the attendant master KAG, we discussed asset allocation: ‘Pieter, we will be allocating more from equity to fixed income.’

‘But at our recent European summit we all accepted the opportunities for stock pickers and that we should increase the equity allocations to alpha generators.’

‘In principle yes, but we think the risks are still too great.’

‘What about the equity risk premium?’

‘Pieter, in Germany we do not need the Anglo-Saxon obsession with equities.’

‘How about just the Saxon obsession then?’ A pause. ‘Ja, in Saxony we do find people who like some equity.’ I begin to wonder if I should have stayed at home.

‘But Hans, our corporate balance sheet in Frankfurt is screaming for some respite. What is more fixed income going to give us?’

Joachim from the master KAG kicks in: ‘Herr Mullen, the total portfolio looks very good, we have no hedge funds, no credit exposure, certainly no high yield, limited real estate, indexed euro-zone equities and lots of government fixed income.’

‘But now is the time to be putting some equity risk back in the portfolio as we agreed,’ I find myself pleading. But Hans counters: ‘Pieter, the board is very conservative in comparison to Wasserdicht in Amsterdam and you must respect our preferences’.

‘Yes, mutters Joachim, we as the KAG do not like dealing with foreign managers who cannot speak German, cannot explain problems with the portfolio, and do things we cannot understand.’

‘But long-only equity investment is something you can understand. The German plan has missed so much of the rebound this year. You say it is about risk aversion and continued risk aversion, but what about the risk of not achieving the returns needed to keep us all in a job?’

‘Ah, we have thought about that.’


‘Well we thought of taking an example from the Dutch market.’


‘Well not in the plural, but we think we have found an alternative.’


‘Yes, the German plan will appoint a fiduciary manager.’

Pieter Mullen is investment director at Wasserdicht Pension Funds