NETHERLANDS – SPMS, the €7bn pension fund for medical consultants in the Netherlands, has reduced the number of managers for its 9% alpha allocation and introduced new strategies following "disappointing" results over the last six years.

Jeroen Steenvoorden, director at SPMS, said: "Compared with well-performing bonds, the alpha returns were less than expected."

He added that the number of managers was reduced from nine to four, including two fund-of-funds mandates.

"We are now back to funds with a low market correlation," he said.

The SPMS director said the changes resulted in a cost reduction of 60 basis points.

The scheme's alpha portfolio returned 4% last year.

The occupational pension fund for medical consultants saw its assets increase to €7bn last year after it returned more than 16% over the period.

As a consequence, its official coverage ratio – the three-month average of the forward curve, with the application of the ultimate forward rate – increased by 7 percentage points to 112%.

However, in a separate announcement, the pension fund conceded that the return on investments for the first half of 2013 was -1.5%, brining its funding level down to 110%.

However, it made clear that it had decided to keep the market rate as the reference for its investment and risk management.

It pointed out that, because it has hedged 78% of the interest risk on liabilities, the official coverage ratio has become much more volatile than the "market funding".

"Changes triggered by interest movements affect investments immediately but have a delayed or a limited effect on the liabilities," it said, noting that, during the first half, its market coverage increased from 107% to 110%.

SPMS attributed one-third of last year's profit to its interest hedge through swaps.

With a return of 18%, equity was the best performing asset class, exceeding its benchmark by 1.5 percentage points.

Fixed income also performed well, returning 10%.

The scheme's 7% property return was 2 percentage points short of its benchmark.

SPMS said it limited its indexation for this year to its unconditional inflation compensation of 3%, as its current funding did not allow for a more generous indexation.

Because it already factors in this inflation compensation – and bases its long-term assumptions for salary inflation on an equal percentage – it said it considered its coverage as real funding.

Steenvoorden also said the pension fund had divested its equity and credits holdings in the tobacco industry in the first quarter.

The pension fund for medical consultants has 7,925 active participants, 1,180 deferred members and 6,295 pensioners.