NETHERLANDS - SPW, the €4.1bn pension fund for housing corporations, returned -3.9% in investments during the first quarter - just 0.5% short of its benchmark.

To make matters worse, the rise in long-term interest rates also damaged the fund's extensive interest swap hedge and lowered the portfolio's overall return by a further 40 basis points, officials said.

In the last quarter of 2008, the interest rate hedge on 80-100% of the fund's assets allowed SPW to limits its loss on investments to 2.7% by the end of the year rather than end at 12.1%.

That said, the fund has bounced back somewhat since 1Q as the cover ratio had dropped by 6% to 88% during the first quarter, but it has since increased again to 97% by the end of May.

Fixed income was the best returning portfolio in the first three months of this year, according to SPW, delivering a 1%, return, which was attributed solely to the interest yields on government bonds.

But "as uncertainty on capital markets still prevails, corporate bonds generated negative returns," said the scheme.

Equities generated a negative returns of 5.3% but, in contrast to considerable negative results from developing countries, emerging countries performed positively, officials indicated.

Commodities was the worst performing asset class within the alternatives portfolio, returning  -5.1%, whereas private equity and hedge funds yielded a positive 0.4% and 2.3% respectively, SPW said.

The industry-wide Stichting Pensioenfonds voor de Woningcorporaties serves 515 affiliated organisations and has 62,800 participants.

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email