SPW, the €9.4bn pension fund for housing corporations in the Netherlands, has said it is bracing itself for “changing conditions” after reporting a second-quarter return of 6.3%, which took its year-to-date result to 11.3%.

“The combination of rising equity markets and decreasing bond rates is seldom long-lasting,” it said.

“If the equity markets were to factor in bond rates, we would slide back in our deflation scenario.

“However, if the growth reflected by the rising equity markets is gradually priced into bond rates, interest rates must rise, which fits into our ‘stop and go’ scenario.”

SPW said all its asset classes, apart from its opportunities portfolio, contributed to the second-quarter return.

Equity was the best performing portfolio, with emerging markets returning 8.3% and developed markets 5.4%.

Commodities also performed well, delivering 5.1% and outperforming the benchmark by 1.6 percentage points.

SPW’s property investments, with a return of 5.3%, continued on from their first-quarter performance of 3%. 

Credit and government bonds returned 2.8% and 3.2%, respectively, due to narrowing spreads.

The pension fund’s stakes in hedge funds, private equity and infrastructure generated 1.1%, 3.6% and 3.7%, respectively, with the latter underperforming by 3 percentage points.

SPW said it lost 0.7% on its opportunities portfolio, and noted that 2.9 percentage points of its quarterly result was due to the value increase of the swaps it used to hedge the interest risk on its liabilities.

During the second quarter, the Stichting Pensioenfonds voor de Woningcorporaties saw its funding improve by 1.2 percentage points to 117.4%.

In other news, Vervoer, the €17.1bn pension fund for private road transport, reported a second-quarter result of 6.6%, although without specifying returns across asset classes.

As a result, its return over the first six months rose to 12.6%.

Over the second quarter, funding increased by 1.1% to 113.8%, largely due to the performance of its 60.5% fixed income allocation, as well as its derivatives to hedge interest risk.

However, it noted that its coverage ratio would have been 110.3% based on the actual market rate, rather than the official discount rate of the three-month average with the ultimate forward rate.