Catherine Vialonga


• Invested assets: €16bn (Aug 2013)

• Mandatory pension fund for France’s 4.5m civil servants

• Hybrid of DB and DC

• Date established: January 2005

• Funding level: 106% (Aug 2013)

Our current exposure to real assets concentrates on real estate. We started to invest in the asset class in 2012. A law allowing investments in property came into force only at the end of 2010 and it took us about two years to start investing.

The first money was attributed to the portfolio at the end of 2011 and we started to invest in 2012 Currently, €24m is allocated to the portfolio. In total, we plan to invest around €750m over three years. We aim to allocate all of that money to directly held real estate, all via external managers. We have issued one mandate for French assets and another one for European property.

The main reasons for us to invest in real estate are that it offers diversification, generates good returns and acts as an inflation hedge. As a long-term asset class, we also want to benefit from the illiquidity premium.

We also aim to achieve a premium over government bonds with our property investments. Our reference is the French government curve and in this low-interest-rate environment, we want to produce at least 2% above the curve, which is altogether around 4-5% in the long term on the French markets.

We will not only rely on real estate. In the next few years we plan to invest in related asset classes such as infrastructure and private equity, which match our long-term view in a similar fashion, given our positive cash flows and long-term liabilities.

We do not worry about a bubble forming in real estate because we have just started to invest in this asset class. Nevertheless, we want to be cautious and make sure our asset managers do proper due diligence on every investment.

There are many service providers in this area, which is why we need to be very careful in the selection of service providers and in the selection of assets. It is important to appoint specialists with a local presence and with specific knowledge of the local markets. We also have to make sure that the asset manager sticks to a strict selection of assets.

Socially responsible investment (SRI) is at the core of our pension fund and translated into our investment criteria. We also look at the SRI capabilities of potential real estate managers. First we screen them to see whether they have existing SRI resources, then we analyse how they would apply our own SRI charter to their property assets.


PFA Kapitalforvaltning


Jesper Langmack

Managing director

• Invested assets of PFA Pension: DKK349bn (€46.8bn) (Dec 2012)

• Insurance policies: 1.3m

• DB and DC

• Date established: 1917

• Solvency ratio: around 210% (Dec 2012)

PFA Pension has included real assets in its portfolio for many years.

At present, we are invested in real estate and infrastructure.

Real estate is considered as its own asset class, while infrastructure is part of our alternatives portfolio.

The main reasons for investing in real estate and infrastructure are the diversification, the returns and the different exposures to risk these asset classes bring.

We have recently expanded our real assets portfolio.

The driver behind the increase in the portfolio was that the expected returns of real assets such as non-listed infrastructure, real estate and private companies – have become relatively more attractive.

We expect our real assets to generate annual returns of more than 6%, depending on the level of risk assumed.

Some of the investments have met those expectations, others have not – it varies from area to area.

We invest both directly and indirectly, via funds, in our real assets.

In our directly held investments, we have a home bias for Danish assets.

Because we are always worried about bubbles forming in any of the real assets we invest in, we always consider an exit strategy prior to making the investment.

The challenge when it comes to investments in real assets, particularly infrastructure, is due diligence, which needs to be thorough and is therefore more time-consuming than those of other asset classes.

Real assets are less liquid compared to, for example, equities and bonds, something that also needs to be taken into account before we invest.



The Netherlands

Henk Huizing

Head of infrastructure

• Assets under management: €140bn

• Fiduciary manager of five DB schemes

• Number of participants in schemes: 2.5m

• Date established: 2008

PGGM has a varied exposure to real assets. It has invested in real estate for several decades already. Our commodities exposure is not part of our alternatives unit and agricultural land makes up only a very small fragment of business. Therefore, our main investments in real assets occur through real estate and infrastructure.

Our first investments in infrastructure took place in 2005. Those first allocations happened through funds until about 2008. Since 2009, we have invested mainly directly, with the exception of emerging markets where we still invest through funds.  

In the Netherlands, we are probably the only service provider that fully focuses on direct investments in infrastructure. A team of 15 is responsible for managing these direct infrastructure investments.

The main reasons for investing in infrastructure are its different characteristics. It is a low-volatility asset class, which provides long-term stable cash flow with an inflation link. It has low correlation with other asset classes but some correlation with the development of GDP. We invest in real estate for similar reasons.

One of our most recent allocations is an investment in Dutch natural gas infrastructure. It is rather difficult to invest in infrastructure in the Netherlands because of the limited number of opportunities, so this investment has significantly increased our domestic infrastructure allocation.

We also have exposure to Spanish and US gas pipelines as part of our aim to diversify our infrastructure portfolio into six or seven sub-segments. Gas infrastructure is an important element in this because it falls on the lower side of the risk spectrum within infrastructure. Renewable energy makes up about 20% of our total infrastructure exposure, including solar and wind in Europe and the US.

Although we notice increased interest and competition for real core infrastructure projects and the prices have gone up slightly, we still believe there is a good balance between demand and supply. In fact, the lack of capital for infrastructure still outweighs the supply of capital.

With direct investments, we are always in competition with other parties. This means we have to be prepared to invest in resources and in due diligence. It is crucial to have a sustainable pipeline, in other words build up a network and create as many opportunities as possible.