The Dutch pension fund for general practitioners (GPs) has halted plans to move its entire equity allocation into a concentrated portfolio of around 70 stocks, transferring only 25% of its equities to the new strategy instead of the planned 100%.
Pensioenfonds Huisartsen cited “the great uncertainty in the financial markets” as the main reason for pausing the transition.
It announced at the end of 2024 that it would replace its passive equity strategy with an ESG filter with a concentrated portfolio, arguing that the approach would be easier for members to understand.
However, within months of launching the strategy, implementation was put “on hold”, chief investment officer Pieter de Graaf told IPE.
“We wanted to implement the new portfolio gradually, but also not take too long for it. The idea was to have transitioned completely by the end of 2025, but we soon saw large market discrepancies due to Trump and AI tariffs, among other things,” he said.
Implementation paused
By the end of the first quarter of 2025, the fund had transferred 25% of its equity portfolio to the new concentrated strategy, while the remaining 75% stayed in the passive ESG-filtered portfolio.
Following the market turbulence triggered by US president Donald Trump’s tariff announcements on 2 April, the fund decided to halt the remainder of the transition.
The concentrated portfolio, managed by US asset manager Lazard, subsequently recorded substantial losses, influencing the decision not to proceed with further transfers, De Graaf acknowledged.
“We’re waiting to see what happens now. At least until the middle of next year, the ratio within equities will remain at 25%-75%,” he said.
Underperformance
The fund declined to disclose the exact return of its concentrated equity portfolio during 2025, but said it had not recovered from its losses.
Overall, the pension fund’s equity portfolio returned -1% in 2025, compared with a net euro return of 7.9% for the MSCI ACWI.
De Graaf confirmed that the concentrated portfolio was the main contributor to the weak performance, although he added that the passive ESG-filtered portfolio also underperformed the index.
The decision to retain most of the passive portfolio appears to dilute one of the fund’s original objectives of improving explainability for members.
“Of course you hope that everything goes well, but it doesn’t always work out as you hope. We have therefore made a shift in the prioritisation of our objectives. The goal of explainability is slightly lower in the construct we are in now,” De Graaf said.
Critics claim vindication
The decision to adopt a concentrated equity portfolio attracted strong criticism when it was announced, with opponents arguing that the strategy lacked sufficient diversification.
Investment consultant Bob Galesloot, who has closely followed the fund’s equity strategy since its introduction, said in a LinkedIn post that the risk of significantly underperforming the benchmark had existed “from day one”.
He added: “As I argued at the time, such a strategy is difficult to maintain administratively if the first few years are (severely) disappointing due to bad luck or for some other reason. Not to mention the questionable long-term prospects of such a portfolio.”
