Austrian VBV Group’s severance payment fund, VBV Vorsorgekasse, has posted negative returns (-1.8%) in the first quarter of this year on the back of a difficult market environment.
The negative performance is, however, below the average of -3.7% recorded for the provident funds in Austria by the Oesterreichische Kontrollbank (OeKB), the group said.
The returns for the first quarter of the year were driven mainly by bonds and equities’ performance. VBV carried out an interest rate risk hedging to limit the losses on bonds, but it did not succeed in compensating them.
The widening of risk premiums on corporate bonds also had a negative impact on performance despite a smaller allocation.
A positive contribution to limit the losses in Q1 came from the scheme’s ’Held to Maturity’ loans portfolio, in addition to real estate and infrastructure investments, it said.
This year the FTSE Euro Broad Investment-Grade Bond Index (EuroBIG) lost 5.36%, the MSCI World ESG was down 6.57%, VÖNIX, the sustainable equity index of Austrian companies, this year lost 15.05%, and the Euro Stoxx 50 returned -9.21%, while gold gained 5.92% and Brent crude 38.74%, the fund said in a newsletter to justify its Q1 losses.
Losses in the first quarter of this year were shaped by the impact of Russia’s invasion of Ukraine, and an acceleration of the rise of commodity prices which is fuelling inflation, the pension fund added.
VBV noted that the difficult market environment continues in the second quarter, with inflation remaining high, but now likely to have peaked in the US.
The fund invests 44.4% of its total assets in bonds, 14.2% in equities, 17.3% in ’Held to Maturity’ loans, 9.8% in real estate, 3.9% in alternatives, 3.4% in money markets and 7% in cash, as of the end of March of this year.
Assets under management at VBV Vorsorgekasse increased by 12.5% in 2021 to €5.4bn.