Germany’s BVV to put €1bn in alternatives
GERMANY - BVV, the €18bn pension fund for Germany's financial industry, says it has earmarked €1bn this year for new investments in several asset classes, notably private equity and hedge funds.
In an interview with German pensions magazine dpn, BVV chief executive Rainer Jakubowski said the scheme had invested in two private equity fund of funds and that its exposure to the asset class could reach 1.5% of assets. Investment volumes were not disclosed.
IPE reported in April 2006 that BVV had set aside €170m for inaugural investments in private equity.
The magazine also quoted Jakubowski as saying the scheme would take part of the €1bn and allocate it to its five hedge funds now that the products had reached their return goals.
In April 2006, Jakubowski expressed huge disappointment with BVV's hedge fund investments, noting that in 2005, they had underperfomed the scheme's bond holdings.
Back then, he said he had given BVV's hedge fund managers until the end of 2006 to show "an above average return".
Finally, Jakubowski told dpn that part of the €1bn would be allocated to small and mid-cap shares as well as Asian equities. He added that with respect to fixed income, the scheme would invest a bit more in products with absolute return strategies. No further specifics were given.
At the end of 2005, BVV had 73.6% invested in fixed income and 11.7% in equities. Another 4.4% was held in real estate - including 1.1% directly held and 3.3% invested in funds.
Berlin-based BVV, which is an insurance-type German Pensionskasse, also has 313,000 contributing members, from whom it took in around €500m in 2005. Its pensioners number 78,000.
BVV's return for 2005 was 5.4% - or above the 4% average for other German Pensionskassen. These schemes guarantee an annual return of 2.25%.
Separately, German private equity association BVK has reported that its members invested €3.6bn last year, an increase of around 20% from the previous year. The investment went to 970 firms in Germany.
BVK also said fund raising volume totalled €2.8bn in 2006, or €100m less than in 2005. It added that international investors accounted for more than one-third of the fund raising volume in 2006, up significantly from previous years.