ABP shrinks by 7%
Hit by falling stock markets, Europe’s largest pension fund, the Dutch civil servants’ ABP, has posted a 7.2% decline in its capital value to E135.5bn – though it sees no reason to change its investment strategy.
Stichting Pensioenfonds ABP says it recorded a 7.2% decline in its investments in 2002, taking its capital value to E135.5bn, down from E147bn a year earlier. But there was a slight improvement in the fourth quarter, with a rise of 2.2%.
ABP’s investment director, Jean Frijns, noting three consecutive years of falling markets, says: “The big movements on the stock markets are no reason for us to change our investment strategy,” he said. He added that ABP has a broad portfolio. “The risks of falling equity markets are contained as we do not automatically buy more to compensate for market falls.” He says the fund held 29% of its assets in stocks are the end of 2002. This compares to a 49% share at the end of 2001.
“We believe that in the long term equities will outperform fixed income,” Frijns says, adding that ABP feels bonds are overvalued at the moment.
He says that, after a cyclical readjustment, equities will moderately outperform bonds/debt in the medium term.
ABP adds that its cover ratio has declined to 103% as at the end of 2002, from 122% a year earlier.