NETHERLANDS – PGGM, the E57bn pension fund for healthcare and social workers in the Netherlands, says it has benefited from the dollar’s recent slide against the euro.

Writing in Holland’s Financieele Dagblad, Gerlof de Vrij, the fund’s head of strategy and research investments, says PGGM’s decision in 2000 to fully hedge its currency exposure has paid off.

“Ten years ago, PGGM started hedging its currency exposure, first for 50% and from the year 2000 onward, for the full 100%.” The fund made an exception for emerging market currencies.

PGGM decided to fully hedge because it believes that, in the long run, currency exposure only leads to volatility, instead of yields. “The elimination of this volatility risk lowers the chance the coverage ratio is too low,” De Vrij says.

PGGM’s timing was favourable, to say the least. When PGGM decided to fully hedge, the dollar was trading at 90 euro cents. The greenback is currently trading at around 1.34 euros, which would have led to 30% fall (or E7bn) in PGGM’s dollar investments (measured in euros) if it had not hedged.

The health care fund says the low dollar has led to a better performance of its international stock portfolio, because the cheap dollar has given US stock markets a much-needed boost.