NETHERLANDS - The €13.6bn Dutch pension fund of electronics giant Philips lost 3.5% during the fourth quarter of 2010 due to the effect of rising interest rates on its large fixed income holdings in its liability-matching portfolio.
However, with a coverage ratio of 109%, its funding is still 1 percentage point above the legally required level for its financial buffers, officials said.
The Philips scheme, which has a high number of pensioners, has divided its assets into a liability-matching portfolio for a stable income and a return portfolio for extra yields, comprising 70% and 30% of its assets, respectively.
The liability-matching portfolio lost 6.8%, whereas the return portfolio generated 5.7%, underperforming and outperforming their respective benchmarks by 0.2%, officials said.
They added that the result of the return portfolio was largely due to the performance of hedge funds and high-yield credit.
The Philips Pensioenfonds has 16,460 active participants, 60,120 pensioners and 33,020 deferred members.