VBV and APK beat the market
AUSTRIA - Implementation of an overlay strategy and increased exposure to hedge funds have helped the €4.2bn VBV Pensionskasse to beat the market in the first half of 2008, its new CIO has told IPE.
Günther Schiendl, who joined VBV from rival pension fund APK at the beginning of the year, did not want to reveal the exact return but confirmed the fund performed better than the average multi-employer Pensionskasse. (See earlier IPE article: VBV poaches manager from IPE winner)
Christian Böhm, CEO of the €2.4bn APK, also confirmed his fund had performed better than the market but would not give a figure.
According to the the Austrian control bank ÖKB, multi-employer pension funds saw a negative return of -4.65% in the first half of the year compared to -6.2% for company funds. (See earlier IPE article: Austrian funds return -4.95% in H1)
VBV's Schiendl noted the fund had "moved very" fast in January to implement an active market risk control via an equity index futures overlay which helped stem losses.
Schiendl said the fund did not actively change its exposure to equities but made some shifts within the allocation by changing - undisclosed - managers.
"Mostly, it was because their style did not match our expectations anymore but in one case it was continued discontent with the performance," said Schiendl.
The fund also upped its hedge fund exposure to 10% in January, most of which is invested in multi-strategy products with some "satellites in certain focussed themes", Schiendl said.
"Our hedge fund portfolio performed positively in the first half while most hedge fund indices were around zero."
In addition, VBV has taken some of the management of core European sovereign and investment grade bonds in-house as external managers were not adding value.
Schiendl pointed out it is a very difficult year for all investors but compared to the performance of some products which in the past had been sold as "safe investments" he noted the -4.6% negative return of Pensionskassen is relatively good.
"It is often overlooked that Pensionskassen are on a very high level of sophistication when it comes to asset management as we are frequently making use of derivatives to stem losses which are not even used by large asset management companies," he added.
He pointed out the VBV was not burying its head in the sand in this difficult market environment but using market opportunities.
For example, the fund is working to increase its real estate exposure from the current 2-3% to up to 5% or even 10% for some members via funds and direct real estate holdings.
"Similarly, we are looking into the possibilities of investing in credit instruments like ABS or CDOs which we had not been invested in previously."
Schiendl pointed out there might be some good opportunities currently in the sector but stressed that "the first opportunity which presents itself is not always the best one" and that no decision on these investments had been made yet.
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