GERMANY - The €300m German pensionskasse for cooperatives (Pensionskasse der Genossenschaftsorganisation) has changed its fixed-income portfolio in the wake of the financial crisis and is considering further asset diversification.

The pensionskasse for co-operatively organised businesses, including the Raiffeisen banking group and other credit associations as well as the milking federation, is almost solely invested in credit instruments.

In 2009 as much as 76% of the capital for the 20,000 members was invested in covered bonds and bonded debt and another 13% in other fixed-income instruments. Only 2% went into equities, 5% in property (mainly land) and the rest in deposits.

Given the low interest environment the pensionskasse moved away from its purely buy-and-hold strategy for the credit portfolio and made some active decisions after the crisis.

"Especially in times when spreads were widening too much some mature investments were sold off early and at the same time good yields were bought in good quality bonds (investment grade only)", the pensionskasse noted in its annual report.

Furthermore, the fund also diversified into corporate bonds, sold some land and bought "high-yield real estate" instead.

"We intend to diversify our asset allocation further," the fund noted, but no details are available yet as the results of the annual Asset Liability Management (ALM) study will determine the portfolio.

The pensionskasse pointed out that it has passed all scenario-based stressed tests as well as those done by the German supervisor Bafin.

"The pensionskassen's strategy has worked and we could increase our return compared to 2008."

The net interest on capital for the fund's members (after filling buffers) is 4.9% for 2009 compared to 4.8% for 2008 while the actual return on assets was 6.7% last year.