NETHERLANDS - New rules should be set under which pension funds can invest in hedge funds, says the largest labour union FNV Bondgenoten.
According to its chairman, Henk van der Kolk, pension funds like the €194bn civil service scheme ABP, don't take enough account of the negative effects of hedge funds on corporate Holland.
A code should be developed with criteria for how hedge funds act as shareholders of Dutch listed companies, the daily Het Financieele Dagblad quoted Van der Kolk as saying. Unions are represented on the board of pension funds.
"Hedge funds are causing a lot of unrest. Their only goal seems to be to make the largest possible returns within the shortest time, by buying, splitting and selling of companies or parts of them," the union's chairman said.
"A response is difficult, because there are a lot of misunderstandings about hedge funds. They follow a wide range of strategies, which you can't lump together," ABP spokesman Thijs Stegers responded.
"Moreover, during the discussion many players come up with ideas, without making clear what they are exactly talking about, and which questions to want to be answered," he added. Stegers announced a formal statement on ABP's website.
The €74bn healthcare scheme PGGM didn't have a spokesperson available for comment.
Earlier, economics minister Joop Wijn had criticized hedge funds, by comparing them to "locusts who are eating-up companies".
Finance minister Gerrit Zalm subsequently criticized his colleague, saying his comments were "a caricature and out of touch with reality". They were "not useful for the investment climate in the Netherlands".
The chairman of industrial group Stork has also been critical of venture capitalists. "Some hedge funds go too far. Their aim is to create momentum and a quick profit on market fluctuations," daily De Telegraaf quoted Sjoerd Vollebregt as saying. "The market is hardening," he concluded.
Recently, hedge funds have targeted large companies like oil giant Shell, retailer Ahold and publisher VNU.
Governors of listed companies shouldn't enter discussions with activist shareholders too soon, financial regulator Authority Financial Markets has said recently. The announcement has been considered as support for Ahold, which is under pressure to split-up from hedge funds Centaurus and Paulson.