Small market, foreign focus
The small size of the domestic equity market has forced investors to invest more abroad, mainly in the Euro-zone; less than 5% of total assets are invested in Belgian equities. The small size of the average Belgium pension fund and tax benefits have encouraged the use of investment funds, with around 70% of total institutional assets invested this way.
At the end of 2001, Belgian pension funds were investing 48.2% of their total assets in equities. Bonds accounted for 40%, real estate for 4.3% and cash represented 5.8% of total investments.
For the equity portion, Belgian pension funds concentrated mainly on the Euro-zone. This type of investment represented 55% of total equity assets at the end of 2001. US stocks amounted to 22.2%, and 6% was invested in Asian markets. Exposure to European countries outside the Euro-zone represented 12.7% of the equity portfolios.
The vast majority of fixed income portfolios were invested in euro-denominated bonds (90%), with only 6% invested in the dollar zone.
According to data from the ABFP, the portfolios of larger pension funds were more diversified than the average, showing greater exposure to the US and European countries outside Euro-land, as well as quite a significant interest in emerging markets, which in some cases represent around 5% of total assets.