BELGIUM - The €970m pension fund of Belgian banking and insurance group KBC has seen its assets grow by nearly €10m in the first six months under its new liability-driven investment (LDI) study.
Edwin Meysmans, managing director of the fund, revealed today since implementing the LDI strategy for the scheme in June last year, the LDI funds, both inflation-linked and non inflation linked, have grown to €318m from just over €308m.
Speaking in Amsterdam at the LDI Europe 2008 conference, Meysmans presented a case study of his fund, recounting how KBC switched 40% of its assets to an LDI strategy within a week last year.
"We now have a hedging or matching portfolio, part of which is inflation-linked," he told delegates, though adding the first six months are "very preliminary results".
Calling the exercise a success, he argued the strategy has reduced volatility and improved budgeting within the fund.
Nonetheless, Meysmans conceded the cost of manager fees has significantly increased since June, particularly for equity and real estate.
With the LDI strategy, KBC also implemented a new strategic and tactical asset allocation, whereby currently 50% is strategically placed in equities, 40% in LDI, nothing in bonds and the rest in real estate.
Meysmans told delegates he fund has decided to review this asset allocation on a yearly basis instead of on a three-yearly basis.
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