NETHERLANDS - The €370m pension fund for privatised government organisations (SFP) has chosen ING Group as its new asset manager.

The appointment follows SFP's extension of its administration contract with ING subsidiary AZL until 2014, said officials.

The assets of the Stichting Federatief Pensioenfonds have until now been managed by Goldman Sachs Asset Management, and its equity portfolio was invested in GSAM's quantitative equity fund.

But according to Heerlen-based AZL, ING's new implemented client solutions (ICS) department will be responsible for the fiduciary management of SFP's assets.

The fiduciary task includes balance management, the selection of managers and risk management, it added.

Dick Snijders, SFP's chairman, said the combination of AZL and ING ICS was the deciding factor for choosing ING.

"ING is one of the few market players which offer both pension and investment administration as well as asset management, including managers selection and monitoring," he explained.

SFP was one of the few Dutch pension funds to deliver a positive return in 2008 as it generated overall returns of 3.9% over 2008 as its 63.8% fixed income investments returned 20.4% compared with a 17.7% equity allocation yielding -39.2%.

The scheme said it is developing a new investment policy based on a recent asset-liability study by Ortec Finance and Hewitt Associates, which recommended a 5% allocation to commodities, as well as a 5% allocation to property, at the expense of the current strategic allocation to fixed income and equity respectively.

At present, the strategic assets mix of SFP consists of 25% equity and 75% fixed income.

In order to improve the scheme's recovery potential, the ALM study also recommended a full hedge of its currency risk, as well as including investments in emerging markets' equity.

SFP, which has 9,160 participants, had a cover ratio of 93.6% at the end of 2008.
Its funding level suffered in the previous two years when the pension fund generated negative returns.

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