The €7bn pension fund for medical consultants (SPMS) in the Netherlands has reported a 50% return on its Japanese equity investments in 2013.
Jeroen Steenvoorden, the scheme’s director, said: “Because we fully hedged the currency risk on the yen, we could fully benefit from the equity yield.”
He added that, without currency cover, the net return in euros would have dropped to 22%.
Meanwhile, SPMS’s 34% equity allocation generated a 17% return, with US and European equities returning 28.5% and 27.2% respectively.
However, rising interest rates led to a 5.4% loss on its 44% fixed income allocation.
This loss was the main reason behind the scheme’s overall return of 1.8% for the period, SPMS said.
Steenvoorden attributed SPMS’s 5% loss on emerging market equities to slowing economies and rising interest rates, triggered by the US central bank’s tightening of its monetary policy.
“Falling local currencies contributed to the investment loss,” he added.
However, the director stressed that SPMS would not alter its investments in emerging markets.
“We consider the disappointing performance as a temporary phenomenon and are positive about the long-term prospects,” he said.
Hedge funds returned 8.5%, according to the pension fund, which noted marked performance gaps between various strategies.
Steenvoorden declined to provide details on the strategies, but confirmed that returns ranged between 1% and 14%.
The pension fund’s 10% property portfolio delivered an overall return of 0.2%, with European listed real estate returning 11%.
By contrast, non-listed property and US listed real estate produced 1% and 2% losses last year.
SPMS said that, on balance, rising interest rates had had a positive effect its financial position, as decreasing liabilities lead to a funding increase of 5 percentage points to 117% at year-end.
The pension fund has granted all of its participants a 3% indexation.