BpfBouw doubled the US dollar hedge on its equity portfolio from 25% to 50% in April 2025, citing uncertainty surrounding the policies of the Donald Trump administration and broader geopolitical developments.
In its latest annual report, the €66bn Dutch pension fund for construction workers described the move as “a temporary risk-mitigating measure”. The scheme had reduced its dollar hedge from 40% to 25% in 2022 because it regarded the US currency as a safe-haven asset.
However, the fund said developments under the Trump administration had altered that assessment.
“The policies of the Trump administration have led to higher volatility in financial markets and uncertainty about the safe-haven status of the US dollar, among other things,” BpfBouw said.
The fund declined to comment further on the decision or specify the exact date on which the hedge ratio was increased. However, the move appears to have been implemented shortly after the US president’s ‘Liberation Day’ announcement on 2 April, when steep tariffs were imposed on major US trading partners.
The decision proved beneficial as the dollar weakened by more than 13% against the euro during 2025, with roughly half of the decline occurring between April and December.
Developed market equities lag benchmark
BpfBouw’s relatively low hedge ratio during the first four months of 2025 contributed to a return of 3.6% on its developed market equity portfolio.
This was one percentage point below the benchmark return, which had been adjusted to reflect the increase in the currency hedge. The fund attributed the underperformance to three concentrated active strategies: Focus, Global Small Cap and Impact.
According to the annual report, the Focus strategy was phased out during the year.
“Within this strategy, performance was highly dependent on company-specific factors, as a result of bottom-up stock selection,” the fund said.
Private equity review
Private equity returned -7.5% in 2025, prompting BpfBouw to undertake what it described as “extensive research into the quality of the companies in the private equity portfolio, with a focus on profitability, growth and debt levels”.
The fund concluded that the underlying companies remained of good quality.
“Dispositions in 2025 confirmed this picture, because almost all sales generated higher proceeds than the last known book value. The long-term return of the portfolio also does not give reason for an adjustment in the portfolio composition,” it said.
BpfBouw had previously attributed the negative private equity result to high valuation levels and a disappointing exit environment.
Impact allocation target missed
The pension fund also missed its target of allocating at least 1% of assets to impact investments by the end of 2025, reaching 0.7%.
A spokesperson said capital commitments were being deployed more slowly than expected, but added that the scheme expects to achieve its target this year.
Overall, BpfBouw reported a total return of -3.9% for 2025, which it attributed primarily to rising interest rates that resulted in significant losses on its bond and mortgage portfolios.
