Austria's VBV increases exposure to domestic corporate bonds
AUSTRIA - VBV, the largest Austrian Pensionskasse, underperformed the market last year, but made good returns, increasing its exposure to Austrian corporate bonds.
With a 2009 return of 7.6%, the €4.3bn VBV is well below the market average of 9%, but only slightly below the average performance of multi-employer funds at 8.4%. (see earlier IPE story: Austrian company funds enjoy a better year)
Günther Schiendl, CIO at VBV, said: "The explanation for this performance is that one-third of our customer portfolios (the investment and risk collectives VRG) is invested defensively, either by customer choice or because of the existing liabilities.
"That makes it completely impossible to perform better than the market average in an equity year such as 2009."
He added that those portfolios in which more risk could be taken performed well above average.
In the Austrian second-pillar system, Pensionskassen have to offer a number of portfolios for companies joining the fund, with nearly bespoke risk and investment profiles.
Being the largest fund in the system, VBV has 43 different portfolios to manage, while company pension funds often only have one or two.
Last year, the fund increased its exposure to Austrian corporate bonds, making use of new issues like those from Austrian steel company Vöest or domestic retailer Spar.
VBV said these investments contributed very well to performance.
It also noted it remained invested in equities throughout 2009 despite the initial market downturn in the first quarter, as this meant it did not have to buy back shares at a higher price later in the year.
For 2010, Schiendl did not expect much change to the asset allocation, but he said the fund was considering to "streamline" the absolute return allocation.
He also said the real estate sector would be "extended slightly" if suitable investments became available.