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TNO puts E30m into hedge funds

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NETHERLANDS – The 1.3 billion-euro pension fund of Dutch research institute TNO has allocated 30 million euros to hedge funds, taking the cash out of equities.

PAAMCO, Pacific Alternative Asset Management Co. said in a statement that Stichting Pensioenfonds TNO has awarded it a 15 million-euro multi-strategy, fund of hedge funds portfolio.

Henk Bogerd, investment manager at the Rijswijk-based fund, said the same amount has been awarded to hedge group EIM. He added the cash was taken from equities managed by a Dutch asset manager. According to “Investment Funds and their Advisors 2003” the managers include Fortis, ABN Amro and ING.

PAAMCO quoted TNO director Eric van Ballegooijen as saying: “In conjunction with our consultants FundPartners we conducted an extensive process, screening the universe of fund of hedge fund providers in Europe and in the US.

“Sixteen managers were invited to tender before we finally awarded a mandate to PAAMCO and to EIM.

"Our interest in hedge funds stems from a further diversification of the equity portfolio, by means of investments with low correlation with the listed markets and an interest in absolute return strategies.

“The first reason contributes to a lower risk profile and the second reason is more fundamental, since the pension industry is in fact an absolute return business given its liabilities. It cannot be driven by beating benchmarks.”

Stephen Oxley, the former Watson Wyatt consultant who is PAAMCO’s managing director in London, said: “We are absolutely delighted to have been appointed by SPF TNO, particularly after such a thorough due diligence process led by their consultants.

“Dutch pension funds are an important potential client base for PAAMCO as we develop our European institutional business.”

He said TNO was one of the first mid-sized Dutch institutions to allocate to funds of hedge funds.

“This could be the start of a significant trend as more pension funds in the Netherlands recognise the investment and diversification benefits of allocations to alternative assets and their consultants equip themselves to provide both asset allocation and manager selection advice in the area.”

The fund last month chose Hewitt Heijnis & Koelman as actuary and pensions consultant. The fund returned 7.25% in the second quarter, and –3.48% in the first quarter.

TNO was set up in 1930 to provide companies and government with research support.


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