PNO Media makes Principal decision over GEM equity

NETHERLANDS - PNO Media, the €2.543bn pension fund for the media, has appointed Principal Global Investors to manage a global emerging markets equity mandate.

Principal will take on a $146m (€98.78m) global emerging markets mandate, which will then sit inside the pension fund's equities allocation, to make up part of its 36% strategic equities holding.

PNO Media currently has a strategic allocation of 36% equities, 39% fixed income, 15% in real estate, 5.9% in private equity, 0.7% in infrastructure and 2% in commodities, according to the fund's 2008 annual report.

That said, the equities allocation was overweight at 38% by the end of June, along with real estate which at the time accounted for 15.4% of the fund or €376m, leaving infrastructure and commodities underweight at 0.7% and 1% respectively, alongside a €47m interest rate hedge and a €28m currency hedge.

The pension fund has pulled back its cover ratio over recent months, and stood at 98% by the end of August, having recovered from 83.7% in February 2008 to 93.4% by the end of June 2009.

The fund's cover ratio has followed the stock market recovery in recent months, said a spokesman for the PNO Media pension fund, as its equity allocation delivered a return of 16.8% by the end of Q2 2009, alongside a 5% gain from fixed income, and a 12.8% return on commodity investments.

In contrast, however, real estate investments fell 2.2% in Q2, while infrastructure lost 1.8% and private equity investments lost 6.7% so the fund's overall quarterly return was 7.1% at the end of June before currency hedging, but was cut by derivatives activity to 4.5%.

Officials were unavailable for further comment today, but had stated earlier in the year that the fund was not expected to see any significant changes to its strategy once a recovery plan had been submitted to the pensions regulator, De Nederlandsche Bank (DNB). (See earlier IPE article: Weathering the storm)

The PNO Media pension fund has 30,000 members.