Pensioenfonds Fysiotherapeuten has transferred 40% of its equity portfolio to a new custom-made ESG benchmark, as it will soon implement a new responsible investment policy, said Doreth van den Heuvel, the scheme’s president.
The €4.9bn fund announced the strategy change in its annual report for 2021.
The pension fund is selling its investments in a number of actively managed regional equity funds from Russell Investments as well as its investments in US and European equities in BlackRock index funds.
Finally, Fysiotherapeuten is also selling a Japanese equity mandate from Numeric as well as its stake in a Robeco multi-factor fund.
The scheme is not the first Dutch fund to recently part ways with its factor investments. Loodsen, AkzoNobel and Rabobank are just some of the funds to have taken this step.
All investments that have been sold (apart from the Numeric mandate) are fund investments that have several participants.
“This stops us from implementing our ESG principles in our portfolio,” said Fysiotherapeuten. Hence it is selling these investments.
In total, 40% of the fund’s developed equity portfolio is being reshuffled, accounting for approximately €400m in assets. This money will be reinvested in a custom ESG benchmark designed by MSCI.
At the same time, Fysiotherapeuten will remain invested in an actively managed global equity fund from Russell.
Health and climate
The new ESG equity mandate will be managed by UBS Asset Management. The CO2 intensity will be at least 30% lower than the MSCI World Index.
Only companies that have scores on E, S and G that are at least on par with the benchmark average are eligible for inclusion, according to Van den Heuvel. In total, 25% of index constituents have been ditched.
Finally, Fysiotherapeuten has introduced a 4.5% allocation to green bonds in its portfolio.
The fund has also sharpened its exclusion policy by excluding investment in coal, shale oil and gas Arctic oil and oil from oil sands.
The changes are only the start, as the pension fund is still to implement the results from an ESG member survey it has conducted this year.
The survey showed members want the fund to invest more in the themes health and climate. Fysiotherapeuten has already determined that at least a quarter of its infrastructure portfolio must be invested in renewable energy projects.