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PGGM’s Careon awards DC brief to Vanguard

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NETHERLANDS – Vanguard Investments Europe, the €12.4bn European arm of the US-based Vanguard Group, has been awarded an investment mandate for an undisclosed amount by PGGM subsidiary Careon Levensloop.

According to Careon board member Reitze Douma, Vanguard was selected after an “extensive” tendering process. Careon is a separate entity with its own board and customers, a PGGM spokesperson pointed out.

Vanguard was awarded the mandate in the third quarter of 2005, and no adviser was involved in the tendering process.

“Vanguard demonstrated their ability to provide the set of investment solutions we were looking for, while also meeting our criteria for consistency of the investment process, risk control, cost optimization and commitment to customer service,” he was quoted as saying in a Vanguard release.

According to Vanguard, “Careon will invest in a combination of fixed income indexed, global equity and global property portfolios managed by Vanguard for Careon’s defined contribution, long-term savings products designed to finance early retirement, sabbatical or maternity leave.”

A spokesperson stated that these investments were based on high returns, low costs and low risks.

Vanguard – which stated its primary focus was the provision of Vanguard Investment Series plc Dublin-domiciled funds to pension providers and financial institutions throughout Europe – told IPE it may launch a new active and index fund for European institutional investors in 2006, but declined to comment further.

According to VIE managing director Shellie Unger: “We are very proud of the business that we have built in Europe and we look forward to continued expansion.”

In October 2005, Careon finalised a seven-year outsourcing contract with KAS Bank and Ordina, effective from January 1 2006. The agreement sees Ordina in charge of administration tasks, while KAS facilitates the associated banking process.

Careon was also mentioned in news reports recently following reports that the Dutch pensions regulator DNB could fine scheme giants PGGM and ABP for promoting the levensloop, or ‘life course’ schemes of the subsidiaries. Industry wide pension funds are forbidden to inform their members about products of third parties.

Vanguard’s other highlights for 2005 include the launch of three new Irish UCITS funds in May and July, and a cash flow figure exceeding €4bn.

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