The new collective defined contribution (CDC) pension funds of banc-assurer ING and asset manager NN Investment Partners have replaced part of their listed real estate portfolios with investments in Dutch rented housing.
In their fourth-quarter report, the CDC schemes – established in 2014, in the wake of the division of ING Group – said rented-housing income was inflation-proof and better matched its long-term liabilities.
They made the housing investments through the Woningfonds of insurer ASR.
Last year, SPF, the €800m occupational scheme for physiotherapists, invested €50m in the housing fund, after ASR opened it to institutional investors.
Six institutional investors, including ASR, have invested €820m in total in ASR’s DCRF, with ASR having a 81% stake.
The company declined to provide details on the fund’s intended volume.
The fund focuses on residential property in the unregulated part of the market, with monthly rental prices of more than €710.
ASR said it was aiming for an internal rate of return of 6-8%, with a direct return of at least 4%.
Meanwhile, the €575m ING CDC Pensioenfonds announced an annual result of 1.4% for 2015, highlighting the 9.3% performance of its 33% return portfolio of equities and property.
Its matching portfolio – predominantly euro-denominated government bonds – generated 0.1%.
The €194m NN CDC scheme reported a 1.1% return for 2015 and said it made a 0.2% loss on its matching portfolio.
It return holdings generated 9.3%.
Both pension funds said they lost 1.3% on their currency hedge.
During the fourth quarter, the ING CDC Pensioenfonds delivered a 0.2% return, while its NN counterpart produced a positive result of 0.1%.
Both schemes reported quarterly returns of 5.9% and -1.9%, respectively, on their return and matching portfolios.
The CDC schemes of ING and NN IP have 17,600 and 7,200 participants, respectively.
Since the start of this year, Armin Becker, former director of the Pensioenfonds Arcadis, has been chief executive at both CDC schemes.