Dutch multi-sector pension fund PGB posted a positive return of 0.1% in 2025 as the equity portfolio’s outperformance compensated for losses on its interest rate hedge.
This made €34bn PGB one of few Dutch pension funds to post a positive return for 2025, albeit a narrow one. Most other funds, including the largest five schemes ABP, PFZW, PMT, Bpf Bouw and PME, reported net losses in 2025.
PGB was also the first fund that managed to beat its benchmark for its equity portfolio in 2025. PGB posted a return of 13.2%, compared with the benchmark’s 11.7% return.
According to the fund, active factor strategies contributed positively to the outperformance of 1.5 percentage points. Sustainable index strategies, on the other hand, underperformed.
“This trend was more widely visible in the market: brown assets performed better than green assets, partly driven by the anti-climate sentiment in the United States,” the fund commented in its annual report.
Higher dollar hedge
The outperformance was also helped by PGB’s dynamic currency hedging policy. In 2025, the fund continued to hedge 61% of its foreign currency exposure despite having reduced its strategic foreign currency hedge from 70.8% to 50% at the end of 2024.
PGB said it maintained a higher-than-usual dollar hedge because of “quantitative signals of valuation and sentiment”. It added: “In an environment of a weakening dollar, this contributed positively to the return.”
The fund’s private investment portfolio, which includes private equity, infrastructure, real estate and private debt, returned 6.8%, underperforming the benchmark by 1.1%.
By contrast, PGB suffered a loss of -14.5% on its matching portfolio because of higher interest rates. The fund’s government bond portfolio suffered a loss of 22.1% while investment-grade bonds made a modest positive return of 2.3%.
As a result of the disparate performance of the matching and return portfolios, PGB had a 62% exposure to its return portfolio on 31 December, 8 percentage points more than its strategic allocation, and a corresponding underweight to its matching portfolio.
A spokesperson for the fund declined to say whether the scheme was planning to rebalance the portfolio, stating that this was “market-sensitive information”.
