Geroa Pentsioak EPSV, the multi-sector pension fund for workers in Gipuzkoa, a province in Spain’s Basque Country, returned 5.76% in 2016.

This compared with a 5.13% return in 2015, and the 2.74% average return from Spain’s occupational pension funds during 2016. It took Geroa’s average annual return since its inception in 1996 to 6.48%.

Geroa provides supplementary pension cover for medium and low-paid workers.

Fixed income dominates its €1.8bn portfolio, with a 59% allocation as at end-2016, while 30% was in equities. Fixed income contributed slightly more than equities to the 2016 return, it reported.

The pension fund recently started expanding its direct investments in Basque companies, with a commitment to invest €20m in around 40 start-ups or early-stage companies with innovative products or processes.

Geroa said: “This forms part of our strategy to alleviate the difficulties faced by Basque companies in obtaining finance because of the economic crisis, and also to help avoid the current tendency to move decisionmaking away from the area, as a result of venture capital funds moving into these companies.”

Investments in the Basque Country and Navarra form 12% of the total portfolio. This includes 2.51% invested in Orza, an asset manager set up to invest in Basque businesses, in which Geroa has a 50% stake.

Over the year, Geroa reduced its holdings of ultra-long government bonds, whose low profitability and excessive duration, it said, implied a risk which was not offset by their profitability. The pension fund also increased fixed income exposure to emerging markets.

Exposure to real estate was reduced and replaced by other sectors, such as infrastructure and telecommunications, during the year.