The Netherlands’ civil service scheme ABP will divest its remaining Russian assets. The divestment decision comes shortly after Bpf Bouw also announced the sale of its Russian assets.
The €550bn pension fund said its decision to sell all investments in Russia was inspired by the “shocking Russian invasion of Ukraine and the violence associated with it”. ABP is the second Dutch pension fund to part ways with all investments in Russia. The €78bn Bpf Bouw, the fund for the construction industry, made a similar decision yesterday.
Both ABP and Bouw had already been reducing their exposure to Russia in recent months and years, but this had been unrelated to recent geopolitical tensions. Both funds have suffered heavy losses on their remaining Russian holdings over the past weeks.
ABP said on 24 February that its Russian investments were worth around €1bn, but has since seen that figure reduced to €520m.
Russian government bonds
According to data from pension regulator DNB, Dutch pension funds owned some €5bn in Russian investments at the end of last year. This is equal to about 0.3% of total pension assets. Slightly over half of this amount was invested in equities, but government bonds accounted for 40% of funds’ investments in the country.
Healthcare scheme PFZW has the largest share of Russian government bonds of any Dutch pension fund: it had a €800m allocation to the category in mid-2021. The position’s current value is not known, but it is likely to be considerably smaller following the collapse of the rouble and the steep rise in Russian government bond yields since Russia’s invasion of Ukraine began.
PFZW told IPE last week it did not see a reason to reconsider its investments in Russia, saying it was a passive investor. The fund, however, now appears to be changing course.
A spokesperson for the fund said possibilities to liquidate its Russian investments are being investigated. “But at this moment there are no buyers, so we cannot sell. These bonds will therefore remain in our portfolios for a while, depending on their duration,” the spokesperson added.
The €40bn Pensioenfonds Vervoer and €32bn Pensioenfonds Detailhandel also own Russian government bonds, according to documents on their websites. Vervoer, which declined to reveal the extent of its investments in Russian government bonds, is yet to take a decision about divestment.
“The topic is on the agenda of our next board meeting,” said the fund’s director Willem Brugman. Pensioenfonds Detailhandel, which owned in excess of €200m of Russian government bonds at the end of last year, did not respond to questions about its investments in Russia.
MSCI evicts Russia from EM equity indices
Index provider MSCI will remove all Russian companies from its emerging market equity indices as of 9 March, the firm announced this morning.
After consultations with market participants, the index provider “has concluded that the Russian equity market is currently uninvestable and that Russian securities should be removed from the MSCI Emerging Markets Indexes”, MSCI said in a press release.
The move means that investors in ETFs tracking MSCI’s EM equity indices will automatically divest from Russian stocks, a prominent provider of exchange-traded funds confirmed to IPE.
According to a spokesperson for the same firm, investors that invest via passive mandates are likely to take a similar approach.