SPMS, the occupational pension fund for Dutch medical consultants, has produced an 11.2% return over the first six months of 2014 on the back of positive investment performance and falling interest rates.

The scheme attributed the result, in equal measure, to investment returns and a 70% hedge – using swaps – on the interest risk of its liabilities.

Over the first two quarters of the year, the pension fund’s assets rose to €7.8bn, while its coverage ratio improved by 3 percentage points to 120%. 

However, the pension fund took pains to point out that, were its funding discounted against market rates rather than against the three-month average and application of the ultimate forward rate, its coverage would drop from 115% to 112%.

The scheme for medical consultants also reported a return of 1.8% over 2013.

As a consequence of rising interest rates last year, the scheme’s liabilities decreased, boosting funding by 4.2 percentage points to 116.8% at year-end.

SPMS said its coverage ratio included its annual unconditional indexation of 3%.

Last year, the pension fund’s 36% equity portfolio returned 17%, with investments in Japan, the US and Europe returned 50%, 28.5% and 27.2%, respectively.

The four hedge funds in its alpha mandate returned 8.5%, outperforming its benchmark by 4.8%.

However, rising interest rates caused a 5.4% loss on its 43% fixed income holdings, as well as a 4.1% loss on its interest hedge.

Emerging market debt lost 12.5% over the same period.

The scheme’s credit holdings varied, with European corporate bonds returning 4.7% and US investments losing 4.4%.

The scheme also lost 7.8% on inflation-linked bonds.

Non-listed property returned -1.2%, against a benchmark of 6.5%, whereas listed real estate returned 4.4%.

SPMS reported costs for pensions administration of €444 per participant last year and said it spent 1.12% of its assets on asset management, including 20 basis points for transactions.

The scheme provides pensions for 8,000 self-employed medical consultants and more than 6,500 pensioners.