NETHERLANDS - Progress, the €4bn Dutch pension fund of food and home care products manufacturer Unilever, will focus its fixed income investments on emerging markets, euro credits and very long-term bonds.

The change is part of its new risk-reducing policy, it said. This aims at decreasing its equity investments and increasing the number of asset classes, according  the fund's annual report.

Last year, Progress decreased its equity allocation - comprising of 55% of assets - by €350m, in favour of its fixed income. The fund will start investing in commodities during 2008, it added.

In addition, the scheme has started with strategic hedging of its main currency positions, with a full hedge as a long-term aim.

The scheme reported overall returns of 3.7%, exceeding its benchmark by 0.6%. Its cover ratio rose by 9% to 131%.

Progress' property investments were the best returning asset class by yielding 12.1%, which it mainly attributed to revaluations of its retail portfolio.

Equity returned 1.7%, with the Pacific Rim (excluding Japan) and emerging markets the best performers, with yields of 20.6% and 18.9% respectively, the scheme said.

High-yield bonds and emerging markets were the main contributors to the 2% return from Progress' fixed income investments, which comprised of 29% of the scheme's assets.

Private equity - representing 1% of the scheme's assets - yielded 2.3%. According to Progress, a positive revaluation of a number of investments was wiped out by a drop of the US dollar.

The scheme has taken its first steps towards matching by increasing its allocation to long-term government bonds last year, it said.

Progress has 4,535 active participants, 8,470 deferred members and 12,385 pensioners.

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