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IPE special report May 2018

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German dentists hire Alpha as consultant

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GERMANY - VZB, a Berlin-based pension fund for dentists, says it has hired Alpha Portfolio Advisors as its new investment consultant for its €700m portfolio.

Alpha beat eight other consultants, including Mercer, RMC and FERI, one of Germany’s biggest. Alpha is compiling an updated asset-liability study for the pension fund. It will assist in the assessment and, if necessary, selection of asset managers.

Ralf Wohltmann, managing director of VZB, told IPE that the scheme chose Alpha “because of its convincingly scientific approach” to investment consulting.

Christian Schlenger, Alpha’s managing director and partner, said he believed his firm won the work because of its “dynamic approach” to asset allocation.

“Our approach is very dynamic and risk controlled in that, for example, we continually strive to find the ‘best of two’, in this case either equities or fixed income,” Schlenger said.

The results of the asset-liability study will be known in early summer. Wohltmann said any changes to the pension fund’s investment strategy would depend on those results.

However, Schlenger said that following initial meetings with VZB’s asset managers aimed at getting to know the investment strategy and process, Alpha had already identified some points for improvement. He was not more specific.

VZB employs a master fund for its portfolio, meaning that back-office administration of its sub-funds are consolidated within one provider – in this case INKA, which is part of HSBC Trinkaus & Burkhardt.

Until the beginning of 2005, VZB had also been sourcing a master fund from dbi, which is part of Allianz Global Investors (AGI). Dbi has been retained by VZB for management of a bond fund.

VZB currently invests between 18-22% of its holdings in equities, most of which are European and benchmarked to EuroStoxx indices. Other areas of equity investment include the US and Asia. VZB also has another 20% of its holdings invested in real estate.

A bit more than 50% of VZB’s holdings are invested in bonds, almost all of which are European. US bonds play a minor role, while Asian debt virtually none whatsoever. The remaining small portion is cash.

Founded in 1965, VZB insures around 6,500 dentists from the German capital of Berlin as well as the state of Brandenburg and the city-state of Bremen. According to its 2003 annual report, VZB had a return of 5.3% after costs. VZB’s return for 2004 is still being calculated.

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