NETHERLANDS - The Dutch TNT pension fund saw the value of its investment portfolio rise by 11% in the third quarter of this year, thanks to improvements in confidence about the financial markets.
A statement from the pension fund showed the total investment return in the three months to the end of September was 11.1%, lifting the year-to-date return to 13.8% and the fund’s assets to €4.48bn.
More positive macroeconomic data in that period helped to lift the stock and bond markets and encourage investors to take more risks, said pension fund officials. This in turn boosted equity returns to 15.8% in Q3 and 24.4% in the last nine months on the back of Europe and Asia (ex Japan) market gains.
Bonds delivered a positive of 6.8% return of 6.8% in the third quarter, led by corporate and emerging markets bonds, and despite a decline in the 16-year bond yield from 4.2% to 4% caused by lower than expected economic growth.
In other asset classes, alternatives such as commodities and hedge funds returned 1.5% in three months, maintaining a 8.2% gain this year, and there was some improvement from the fund’s interest rate hedging as the facility delivered a 1.9% gain for Q3 and almost pulled back the year’s loss to -0.3%. Real estate, however, still struggled to deliver positive gains as TNT”s holdings lost 1.3% and 8.9% in Q3 and year-to-date respectively.
The return seen in the last three months is a significant improvement on Q2 performance, when the pension fund admitted its interest rate hedge had done more harm than good. (See earlier IPE story: Increased interest hedge cushions TNT’s loss)
The TNT pension fund now has just under 45% of its assets in equities, along with 40.6% in fixed income (including inflation-linked), 9.3% in real estate and 5.3% in alternatives.
It provides pension benefits to 91,000 members and 41,600 employees.