PGGM mulls a cull of individual equities

NETHERLANDS - Asset manager PGGM Investments is thinking of drastically reducing the number of individual equity investments it holds, in order to simplify its investment policy and build an improved ESG focus on the companies in its portfolio.

"We are seriously asking ourselves whether we need all of approximately 4,000 equity investments to achieve our desired diversification," said a spokesman for PGGM.

"A smaller number would better enable us to follow the companies we are investing in, and would allow us to steer, for example, their policy on environmental, social and governance terms," he added.

Although the spokesman could not indicate when the crucial decision might be made, he told IPE that a first step has been taken through the creation of a mandate worth up a €1bn for non-index-related ‘responsible equity' portfolio, which was built at the expense of listed equity investments.

PGGM had recently stated it will start scrutinising all real estate investments under ESG terms, as part of its strategy to encourage all companies to abide by responsible investment principles. (See earlier IPE story: PGGM to pursue ESG terms for real estate)

The asset manager also revealed in its latest annual responsible investment report that it had 4,340 companies in its equity portfolio at the end of 2008, and had conducted engagement with 603 companies last year, either through its own engagement projects or through a partnership with F&C Investments.

Any scaling-back of the number of PGGM's investments is likely to increase the need for internal staff "as we want to increase our focus on the remaining investments," added the spokesman, although he ruled out the likelihood of a reduction in the "already small number" of external managers.

PGGM sacked over a dozen external asset managers in 2008 for underperformance of their actively-managed portfolios and moved a ninth of its assets into passive management.

PGGM is the asset manager and pensions provider to the €75bn Dutch healthcare scheme PfZW.

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com