The Pensionskasse and the Vorsorgekasse of Austrian occupational pension provider Valida Holding have made their first investments in inflation-linked government bonds, according to the group’s financial statement for 2021.
Under a new strategic asset allocation, the Pensionskasse (Valida Pension) adjusted its portfolio to increase its equity investments and introduced inflation-linked government bonds, bringing the allocation to the new asset class well above the strategic quota during the course of last year, the statement added.
According to Valida, both measures – the introduction of inflation-linked government bonds and higher investments in equities – contributed positively to the scheme’s performance overall last year at least, with equity markets rising significantly on the one hand, and rising inflation on the other, it said.
The Pensionskasse cut investments in euro-zone and US government bonds, and increased investments in “good and bad quality” corporate bonds and emerging market government bonds.
It also decided to reduce equity investments back to its strategic quota, as market prospects were not positive, it said.
The Pensionskasse invests 31.1% of its assets in bonds, 35.6% in equities, 5.3% in real estate, 6.3% in cash and 21.7% in other investments, according to the statement.
Assets under management for the group’s Pensionskasse amounted to around €7.4bn last year, with 281,274 pensioners and beneficiaries, a 1.9% increase compared with 2020 (276,138).
At the end of 2021, Valida Pension achieved an average annual return of 9.41%.
The Vorsorgekasse, Valida Plus, reorganised its strategic allocation last year, increasing equity investments and cutting down on cash and euro-zone government bonds. It added instead inflation-linked government bonds, cashing in from rising inflation throughout 2021, it said.
The Vorsorgekasse also increased its allocation to emerging market government bonds and corporate bonds with better credit ratings, while slightly reducing the corporate segment with a lower credit rating (high-yield).
The duration was also shortened over the year to reduce interest rate risk, Valida said.
Assets under management at the Vorsorgekasse rose year-on-year by 17.4% in 2021 to €4.10bn.
Valida Plus catered to around 2.56 million beneficiaries last year, compared with 2.51 million in 2020, including 2.35 million employees and around 206,000 self-employed and freelance members.
Returns for Valida Plus stood at 5.05% for the business line VG 1, and 5.25% for the business line VG 2.
The VG 1 line allocates 53.3% of its assets to bonds, 28.58% to equities, 6.97% to real estate, 8.06% to cash and 3.09% to other investments. The VG 2 line instead invests 51% in bonds, 20.7% in equities, 7.15% in real estate, 18.74% in cash and 2.41% in other investments.
A total of around 2.84 million people in Austria were beneficiaries of a Valida pension solution last year. The assets under management of the group reached about €11.51bn at the end of 2021, increasing by close to 63% since 2013.