EUROPE - The €16bn Shell pension fund in the Netherlands can maintain its 70/30 equity/bond split because its corporate sponsor can cover any shortfalls, according to the Shell Asset Management Company.
Speaking at the Risk Budgeting for Asset Allocation conference in London today, investment strategist Helmut Cardon stated that the Anglo-Dutch oil giant enables the scheme to have a higher equity risk than many other Dutch schemes.
“It’s not an easy choice but Shell’s corporate profits enable you to take such decisions,” he said during his presentation.
However, it is also important to have a good funding ratio. The Shell scheme has a roughly 1.44 funding ratio.
Responding to a question on what might happen if Shell experienced corporate difficulties, Cardon explained there are contingency plans in place so that the scheme has sufficient assets and can continue to operate.
The Shell scheme also invests 8% in hedge funds. These market-neutral funds are an active alpha play, according to Cardon. The scheme uses bank loans to invest in these funds.
The Shell Asset Management Company manages roughly €40bn of assets worldwide.