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IPE special report May 2018

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Dutch pension returns hit new low

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NETHERLANDS – Performance measurement company WM Co. says Dutch pension fund returns in 2002 were the lowest since it began measuring them.

“The Universe return for 2002 resulted in –8.1%, the lowest return since the inception of the Universe in 1986,” WM said. WM measures 162 pension funds, which it calls the WM Universe of Dutch Pension Funds.

Total invested assets, excluding the two top Dutch funds, the civil servants’ Stichting Pensioenfonds ABP and health care fund PGGM, were 195 billion euros at the end of the year.

“The negative investment returns have been driven by a considerable drop in all equity markets,” WM said, with the worst the hardware and software sectors, telecommunications and media. It added that the negative returns in equities were “further exacerbated” by the returns in international bonds, in as far as the currency risks were not hedged.

But losses were limited, WM says, by gains in European fixed interest, up 9.0%, and real estate, up 5.2%.

Dutch pension funds’ equity allocation has fallen to 36% from 44%.

“The three and five year period’s equities are clearly showing a lower rate of return that fixed interest or real estate,” WM said.

As at the end of December 2002, 49% of the funds’ assets were invested in fixed income – with the bulk, 42% in European issues and the rest in international bonds. Thirty-six percent was held in equities, with Europe taking the lion’s share at 19% and the US 10%.

Alternative investments and cash accounted for just one percent each in the portfolios. Property took a 12% share.

WM is a subsidiary of State Street Corp.

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