Most large pension funds in the Netherlands have recently reduced their exposure to Russian shares and bonds.

The divestments were not immediately inspired by the threat of Russia invading Ukraine, but by unrelated ESG considerations.

Russian equities were down more than 50% today following the country’s invasion of Ukraine, while yields on Russian government bonds climbed to their highest level since 2015 and the Russian rouble devaluated.

Dutch pension funds are relatively insulated from this Russian financial turmoil since they have dramatically reduced their investments in the country in recent years.

Arms embargo

Of the largest five funds, only healthcare scheme PFZW still invests in Russian government bonds. On 30 June 2021 it owned some €800m worth of these bonds. The other four large funds, ABP, BpfBouw, PME and PMT have placed the category on their exclusion lists.

The €550bn ABP and the €78bn Bpf Bouw schemes blacklisted Russian government bonds in December 2020 following the imposition of an EU arms embargo against the country.

Metals industry scheme PMT divested from Russian bonds in 2019 after it introduced a new bespoke EMD index for which it excluded Russia, together with 26 other countries, on ESG grounds.

Technology industry fund PME has blacklisted Russian government bonds for the same reason. Both PMT and PME also exclude state-owned Russian firms for ESG reasons. Besides, PME sold its investments in oil and gas firms Lukoil and Novatek last summer, following its decision to divest from fossil fuel firms.

PME’s investments in Russia now total €65m, or 0.1% of the fund’s assets under management. PMT owns €132m in Russian stocks and bonds while Bpf Bouw has a €160m exposure. The latter fund reduced its investments in Russia “somewhat” recently, Bouw’s director David van As told IPE.

The €277.5bn healthcare scheme PFZW has the largest exposure to Russia – some €1.3bn at the end of June 2021. The fund declined to provide a more recent figure. PFZW is the only one of the largest five funds without any exclusions specific to Russia, and is not planning to change this following the Russian invasion of Ukraine.

Civil service scheme ABP has dramatically reduced its exposure to Russia in recent months. On 30 September, the fund had invested more than €2.2bn in the country.

According to a spokesperson, ABP’s Russia allocation has come down to about €1bn since then. The disposal of many of its Russian assets was not driven by the threat of war in Ukraine, but by the fund’s decision to sell all of its fossil fuel investments.

In September, ABP still owned hundreds of million of euros worth of shares in firms such as Lukoil, Rosneft and Gazprom.

No action

The Danish fund for university workers AkademikerPension this week “quarantined” its Russian investments following Russia’s invasion of Ukraine.

Dutch pension funds say they are “on high alert” and are following the situation closely, but are not yet seeing a reason to take further action.

MN, the asset manager of PMT and PME, has drawn up “a script with detailed actions to take in case of further escalation”, according to a spokesperson.

Bouw pension fund will convene its “financial crisis team once there is a reason to do so”, according to its director David Van As.

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