ABP considers move into age-based investment
NETHERLANDS - ABP, the €215bn Dutch pension fund giant, is looking at the possibility of moving into age-based investments, according to chief investment officer Roderick Munsters.
"Adding elements to lifecycle investing may add value to clients," Munsters argued at the ABP European Pensions Summit in Heerlen, in the Netherlands.
The fund has been working on a new investment framework which, in the coming three years, will allow it consider altering its current policy of uniform asset mix and indexation for all years.
Munsters suggested age-based investments, in the form of lifecycle funds, offered a solution to problems encountered with basic DC plans in the US.
With this approach, the asset allocation depends on the investor's retirement horizon only and is independent of their attitude to risk.
"The main argument for age dependent investing is human capital, the discounted value of an investor's expected future labour income, said Munsters.
The idea is the fund would rebalance the financial portfolio towards stocks, taking more risk when the pension saver is young, and moving more towards bonds when the saver is close to retirement.
Under the new investment framework, ABP plans to implement a weighted combination of liability hedging and risk optimisation.