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IPE special report May 2018

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Hedging affects Dutch public transport schemes

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NETHERLANDS - Hedging and the rising dollar has affected the returns on investment of the Dutch railways pension fund and the scheme for public transport, according to their quarterly results.

The Stichting Spoorwegpensioenfonds, or SPF, posted a return of 1.5% over the first quarter of 2005. The yield before currency hedging of equity was 4.1%.

For bonds and real estate the returns were 1.5% and 1.6% respectively. The contribution for currency hedging, which is part of the long-term strategy, was -1.3%.

The average returns on investment over the past 10 years comes out at 8.8%. Based on a fixed interest rate of four percent, the coverage ratio of the railways fund is 164%, one of the highest within the Dutch pensions industry.

The railways scheme has €10bn in assets under management and its among the 10 largest schemes in the Netherlands.

The Stichting Pensioenfonds Openbaar Vervoer – also managed by SPF Beheer BV – reported returns of 1.3%, or 4.2% before currency hedging. Fixed rates investments and real estate yielded 1.5% and 1.8% respectively.

The public transport scheme, also known as SPOV, has €1.9bn in assets under management. Its funding ratio fell by one point to 133%. Its investment strategy is similar to the SPF.

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