NETHERLANDS - The turmoil in the financial markets has hardly affected the returns of the large Dutch industry-wide pension funds PGGM, PMT and PME, which reported third quarter returns of 2.2%, 2% and 3.2% respectively.
The coverage ratio of PGGM and PME remained stable at 153% and 136%, while PMT's funding ratio dropped by only 1% to 152%. All figures allow for full indexation.
Thanks to the high oil price, commodities was among the best returning asset classes, with yields of 15.6% and 10.8% respectively for PME, the €22bn scheme for the metalworking and electro-technical engineering industry, and PGGM, the €88bn healthcare scheme.
Private equity also performed well at all schemes, with PGGM reporting a yield of 8.2%. The same goes for inflation-linked bonds (PGGM 5%) and equity investments in emerging countries.
PME reported returns of 14.3% on its ‘special projects' portfolio, which includes investments in China, timber and life settlements. The portfolio consists of 5% of the scheme's investment mix. The portfolio's year-to-date returns are 43.7%.
The schemes' returns on property were between 3.4% (PGGM) and 4.2% (PME). According to PMT, the €34.5bn scheme for metalworking and mechanical engineering, the US and Dutch markets were the best performers.
PME and PGGM reported both modest equity returns of 0.7%. According to PMT, which returned 1%, equity yields in developed countries were even negative.
Low interest rates led to a gain of 2.2% of its fixed income portfolio, PGGM indicated. PMT and PME reported returns of 1.6% and 0.7% respectively. High-yield bonds performed negatively, due to the fast risen interest difference with government bonds, PMT pointed out.
"In turbulent time like these, a strongly diversified portfolio has once again proven its worth in a volatile market. Because considerable price falls in parts of our portfolio were offset by gains on other investments, the sub-prime crisis has had little net effect on our coverage ratio," Ilse Bos, PGGM's CEO Investments, commented.
The €215bn civil service scheme ABP did not issue third quarter results, since it switched to half-yearly reporting earlier this year.