Rabobank scheme plots its real estate future
NETHERLANDS - The Stichting Pensioenfonds Rabobank has started to invest in plots of land, to create future building opportunities for its property investments.
Details of the firm's annual report reveal the €10bn scheme has acquired 23 hectares in six different locations and intends to further increase its land ownership.
"To be able to build in time, we need to start preparing at an earlier stage," said chief investment officer Bernard Walschots.
The scheme returned 9.8% in 2006, mainly as a result of the rise of equity markets.
The overall yield of the scheme's equity investments was 20.1%, while private equity returned 29.7% and property and fixed income delivered 12.7% and 0.4% respectively.
To increase returns and the risks spread, the Rabobank scheme has started to further diversify its investment portfolio by introducing alternative asset classes, such as commodities, hedge funds and infrastructure, which together should make up 10% of the scheme's investments over time, the report said.
Hedge funds have so far failed to yield returns, losing -1.2% while the drop in oil prices created a negative yield of -23.9% for commodities.
High yield bonds also returned 7.6% last year while the fund is only beginning to decide on its investments in infrastructure.
According to the annual report, the scheme's investments in alternatives come at the expense of the equity portfolio because thanks to the rise in markets, the equity portfolio has increased to 5% over the value set in the strategic investment mix.
The scheme's strategic investment mix is 40% both in equity and in fixed income, along with10% in property and 10% in alternatives. At the end of 2006, it had invested 46% in equity, 42% in fixed income, 7% in property and 1% in liquid assets.
Last year, the pension fund introduced a new uniform pension plan for all workers, allowing for retirement before 60, or even after the official retirement age of 65.
The coverage ratio of Rabobank's pension scheme increased from 133.7% to 155.4%, allowing for an indexation of 1.71%.
Stichting Pensioenfonds Rabobank has almost 45,000 active participants, 32,000 deferred members and over 9,000 pensioners.