PDN, the €6.7bn Dutch pension fund of chemicals giant DSM, has ceased participating in the costs survey conducted by Canadian firm CEM Benchmarking.
In its 2014 annual report, it said analysis of the annual reports of Dutch schemes similar to PDN had provided sufficient information and proved to be a practicable alternative.
Further, it said the Pensions Federation’s recommendations on cost reporting had made a cost comparison much easier.
It also cited the costs of participating in CEM’s benchmarking with respect to its own expenses for asset management, which have been “low and stable” in recent years.
Last year, PDN reported asset management and transaction costs of 0.20% and 0.08%, respectively, while spending €155 per participant for administration, according to Gerard Rutten, director of DPS, the pension fund’s provider.
However, he took pains to emphasise that PDN had not decided to cease participating in CEM analysis indefinitely.
“Because a cost comparison based on annual reports doesn’t provide a quality assessment of service provision, we may involve CEM again for a study into quality aspects in future,’’ he said.
Rutten confirmed that the costs of a full annual CEM Benchmarking analysis were approximately €25,000.
PDN reported an overall return of 17.7%, of which 80% was attributable to the effect of falling interest rates on the scheme’s holdings of swaps, government bonds and credit.
It said it kept the interest cover slightly underweight relative to its strategic interest hedge of 65%, in anticipation of an expected rates increase.
However, because the interest level continued to slide, PDN lost 0.5 percentage points of the annual result, Rutten said.
A loss on its currency hedge came at the expense of an additional 1.9 percentage point of the scheme’s performance.
PDN’s 44.7% matching portfolio returned 30.4%, with government bonds and credit returning 23.6% and 8.6%, respectively.
Listed property, returning 31.4%, was the best performing category within the scheme’s return portfolio.
The pension fund attributed the 46.5% return on its US property holdings to falling interest rates, strong economic growth and strong currency.
European listed property produced a 22.6% return, thanks to historically low interest rates, stabilising property markets and investors anticipating the quantitative easing programme of the European Central Bank, the pension fund said.
PDN’s equity holdings and inflation portfolio returned 12.5% and 8.5%, respectively, last year.
In contrast, the pension fund lost 7.3% on its commodities portfolio as a result of falling oil prices.
Infrastructure, micro finance, non-listed property and inflation-linked bonds delivered a combined return of 10.6%.