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PGGM spends E30m to hedge against inflation

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NETHERLANDS – The 48 billion-euro Dutch healthcare pension fund PGGM has spent 30 million euros to hedge its pension commitments against inflation.

The fund said it has signed a contract with IEF Capital, under which IEF will provide PGGM with inflation cover. The coverage will be provided via a company specially structured for the purpose, IEF Securities Gold.

“PGGM has paid IEF Capital the present value of the inflation forecast the Netherlands over the next 30 years and will, each year, receive the actual Dutch inflation in exchange,” PGGM said. The deal is backed by real estate.

The fund said its decision was driven by its wish to protect its pension commitments against inflation and that the investment would be part of its fixed-income portfolio. Around 1.2 billion euros of this portfolio is allocated to inflation-related products, mostly US, UK and French government bonds.

IEF Capital is a joint venture between Inflation Exchange Fund and Bouwfonds Asset Management, which is part of ABN Amro. It says there has been a lot of interest from Dutch pension funds for its Dutch inflation-linked bonds.

In April IEF Capital bought a Rodamco Nederland property portfolio for 110 million euros, a move which followed its purchase of all of the commercial real estate of the Shell Pension Fund.

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  • QN-2546

    Asset class: Real Estate Equity Fund (non listed).
    Asset region: Europe.
    Size: Total CHF 600m, approx. CHF 100-300m per fund investment.
    Closing date: 2019-06-28.

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