The €22bn pension fund of banc-assurer ING has reported a 7.2% return on investments over the second quarter, taking its overall return for the first six months of the year to more than 14%.

Its coverage ratio, based on market value, increased by 0.9 percentage points to 129.5% in Q2.

However, the scheme’s official funding – discounted against the three-month interest rate average, with the application of the ultimate forward rate – increased by 3.2 percentage points to 139%.

The pension fund attributed the quarterly result to low growth and inflation, as well as a central bank policy aimed at promoting growth.

Due to falling interest rates, it returned 8.1% on its fixed income holdings, which make up almost three-quarters of the overall investment portfolio. 

Credit and emerging market debt also delivered positive results.

Over the first six months of 2014, fixed income holdings returned 18.2%, outperforming the benchmark by a considerable margin, the Stichting Pensioenfonds ING said.

Its 17.7% equity holdings generated 5.8% over Q2, with emerging market equities returning 8%.

The scheme said the quarterly return on its 4.8% property portfolio was more than 4%, adding that both listed indirect real estate and non-listed property contributed positively.

Listed property generated almost 9%.

The pension fund’s alternative investments in private equity and hedge funds returned more than 4%.

ING attributed the 0.7-percentage-point underperformance largely to the “disappointing” results of hedge funds.

Private equity returned almost 7%, it said.