Equity and real estate boost PMT and PME returns
THE NETHERLANDS - Equity investments in emerging markets and real estate were the main contributors to 2006 returns of 8.7% and 3.4%, reported by the large Dutch industry-wide metal schemes PMT and PME respectively.
Especially during the last quarter, equity performed well by showing returns of 14%, PMT, the Pension Fund for Metalworking and Mechanical Engineering, said. Its overall equity returns were 13.9%.
PMT's real estate yielded 22.2%, especially due to investments in listed companies, it added. Its fixed income and alternative investments returned 1.9% and 3.8% respectively. Hedge funds and private equity also showed positive results.
The returns on PMT's commodities were negative, it said. This was similar to PME, the Pension Fund for the Metal and Electrotechnical Engineering Industry, which reported a yield of minus 18%. PME, which has invested 6% of its assets in commodities, attributed the result to the recent sharp decrease of energy prices.
PME's equity, real estate and fixed income returned 17.9%, 10.3% and 2.1% respectively. Its total returns of 6.8% were halved due to the hedging of interest rates, it indicated.
PME said it has recently extended its forestry investments in the US from €200m to €440m. "Forestry shows relatively stable returns of approximately 7%, and contributes to the spread of risks," it explained.
The assets of PME rose to €20.5bn, mainly due to the take-over of the liabilities of the 13,500-members pension fund VCBV.
PME's coverage ratio rose from 123% to 129%, due to a combination of currency and interest hedging, and the recent increase of the long-term interest, it made clear. The interest rise led to an increase of PMT's funding ratio of 15% to 135%, it reported.
PMT's assets under management rose by €3bn to over €31bn. Half of this increase was achieved during the last quarter, the scheme said. The rise of its equity value led to a ‘limited' assets shift from fixed income to equity.