NETHERLANDS - PfZW and PMT, the giant industry-wide pension funds for healthcare and metal industry workers, suffered losses of over 4% in the first quarter of this year, despite a slight recovery in equity markets last month.

An update issued by PfZW today revealed the scheme had assets under management of €68.3bn and a cover ratio of 89% by the end of the first quarter this year - though this has risen from 85% at the end of February - even though equities gained in the latter half of March.

A slight increase in interest rates in fact damaged the fund's slightly because its hedge worked against a short-term increase in rate, and lowered returns by €358m.

"Better than expected data and new plans by policymakers gave rise to a limited upturn in the second half of March, but the recovery in the final weeks was insufficient to offset earlier losses," said the scheme's quarterly report.

More specifically, the healthcare fund returned -4.5% in the first three months of this year, as it generated -7% on equities, largely because a 33.9% holding in ‘liquid equities' lost 7.8% and structured credit fell 17.5% in value.

Its 17.9% holdings in inflation-linked bonds did at least generate a 0.7% return alongside 0.6% earned bonds, though government bonds and credits themselves lost 0.6%.

Commodities also fell 10%, according to pension fund officials, as its assets are in futures rather than actual commodities and there had been "a negative roll on the prolongation of futures contracts" and these returns differ from actual commodities.

Real estate and infrastructure also took a beating too and lost 6.6% as an asset class, as public real estate returned -15.2% and infrastructure returned -5.6%, while private real estate fell 1%.

The scheme's portfolio of strategies also made a small comeback of 1%.

PfZW's asset allocation is currently divided as 41% equities, with 6.3% in private equity and 0.9% in structured credit, alongside 15.2% in bonds, made up of 11.6% government and corporate bonds and 3.6% high income, commodities futures account for 5.9% of assets, while real estate and infrastructure amount to 15.4% and the portfolio of strategies is 4.2% of assets.

Meanwhile, PMT's cover ratio was decidedly worse at 83% by the end of March, and the fund had assets of €27.4bn after losing another 4.2% in three months.

Officials said the scheme's quarterly report that the willingness of investors to take increased risk was seen somewhat in the rising share prices - March was described as being the best month for equities since October 2002 - but the rising long-term interest rate which eventually damaged potential returns as and it led to lower spreads on government bonds.

The scheme lost 6.4% on its equity investments along with a -4.5% return on its real estate and a -1.2% return on alternatives, compared with a 10 basis points gain on fixed income, though hedge funds were said to have generated a positive gain.

PMT currently has an asset allocation of 19% in equities, 52% in fixed income, along with 15% in property and 14% in alternatives.

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