NETHERLANDS – Improving sentiment on the debt crisis has lead to a broad recovery in several asset classes at the €2bn pension fund for KLM cabin staff.
The scheme reported a preliminary fourth-quarter result of 3.2%, and a year-to-date return for 2012 of 15.8%.
Property and equities – returning 4.6% and 3.7% in the fourth quarter, respectively – were the best performing asset classes, generating yearly returns of 15.1% and 16.1%.
Fixed income and sustainable equity delivered 2.2% and -1.3%, respectively, over the last three months of 2012, and 14.3% and 7.4% for the year.
The pension fund's 8.1% derivatives portfolio for hedging 45-55% of the interest risk contributed 3.3 percentage points to its overall result last year.
However, the pension fund said it made losses of 1.1% and 0.5%, respectively, on its equity and currency hedges.
As a result of the quarterly performance, the nominal funding of the KLM Pensioenfonds voor Cabinepersoneel increased from 112.8% to 115.9%, while its real coverage ratio rose from 64.7% to 67%.
The scheme's minimum required funding is 104.3%, whereas its required minimum financial buffer equates with a coverage ratio of 119.5%.
The pension fund said the fourth quarter had "finally become a good one for equity".
"Following stabilising markets in the euro-zone, European equity in particular performed well," it said.
It attributed the disappointing performance of US equities to uncertainty surrounding the so-called 'fiscal cliff'.
The pension fund noted that fixed income underperformed in the fourth quarter due to investors' "preference for risk-bearing assets such as equity".