NETHERLANDS - The €2bn Dutch pension fund of Heineken, the brewer, saw a 15% return on its investments last year, largely thanks to a gain of over 40% of its equity portfolio.

“Our focus on a worldwide fundamental index, rather than a market cap index such as the MSCI, produced extremely good results this time,” said Frank de Waardt, the scheme’s director.

“Usually, the fundamental index delivers 2-3% extra, but this year the outperformance was approximately 10” according to De Waardt, whose pension fund has been investing in this index for several years.

A large part of the 37% holding in equities had been allocated to the fundamental index, he added.

Asset allocation to the fixed income portfolio returned 4.5%, as inflation-linked bonds also delivered 6.1% and government bonds returned -1.2%, the scheme’s director said.

“We have not been investing in the government bonds of countries around the Mediterranean since 2005, because the very low yields did not justify the risks then,” explained De Waardt.

He continued: “Initially, we missed the extra returns of 0.2% from Meditterranean bonds, but in hindsight we are really glas we pulled out of that risky market.”

The Heineken pension fund lost 6.7% on its 10% allocation to property investments, and this element had decreased two percentage points in value thanks to market developments, he said. At the same time, hedge funds also delivered negative results.

The scheme’s cover ratio rose from 101% to 114.5% following its 2009 results, even after a 4% provision was made to cover the impact of increased longevity, De Waardt indicated.

That said, the funding ratio is also based on an interest-free and payment date-free subordinated loan of €112.8m from the sponsoring company, provided at the start of the millennium.

The Heineken scheme has decided to grant both its active and disabled participants the full 2% indexation, whereas the pension rights of remaining participants will receive part indexation of 0.35%, based on the consumer index.

At the same time, the scheme raised its contributions by 2% to the maximum level of 34% of the pensionable salary, and two-thirds of this is paid by the employer.

The Stichting Heineken Pensioenfonds has approximately 15,000 participants, of whom 5,000 are active and 4,000 are pensioners.

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