NETHERLANDS - PME, the industry-wide pension fund for Dutch metalworkers electricians, saw its assets under management fall by 1.4% in the first three months of this year as an earlier move to protect the fund against falling interest rates instead damaged its returns.

PME's cover ratio dropped three percentage points by the end of March to 87% on the back of a further fall in equity prices as well as pressure from long-term interest rates.

A cut in the fixed income allocation from 60% at the end of 2008 to 54% as well as a shift from 20% to 17% equities was made to provide an 8% allocation to protection against interest rate cuts, however this move actually doubled the loss the fund felt as its returns would only have been -0.7% had it not tried to limit potential losses against its liabilities.

By the end of March, equities lost 7.9%, even though investments in US shares produced 20% returns in March, while bonds gained 1.5%, but a 9% allocation to real estate and a 12% alternatives holding also returned -1%, and the interest rate hedge caused a 0.7% loss.

PME currently provides pensions to over 680,000 members, from over 1,250 mainly large and medium-sized firms.

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