NETHERLANDS – WM Co. says its Dutch pension fund index returned 5.1% for the year to the end of August.

“The total return of the Dutch Pension Fund Index for the year through August 31 is 5.1%,” Edinburgh-based WM said, adding this excludes the impact of currency hedging.

WM, part of State Street Corp., said the index provides an indication of the expected return of the WM Dutch Pension Fund Universe. It is based on the returns of standard market indices and on the asset allocation of the universe as of the end of last year.

It said: “A rise in inflationary expectations in the second quarter of 2004, which pushed bond yields higher and led to a sell-off in equity markets in May, drove the overall returns.

It added that investor behaviour “altered”, as institutions moved away from sectors that are perceived as sensitive to market moves toward more defensive sectors.

“At the same time, investors appeared to favour European-based investments at the expense of Asian markets such as Singapore, Thailand and Hong Kong.”

“These defensive moves convey a broad sense that institutions seem to be taking a less optimistic view of the investment climate,” said Robert Rijlaarsdam, WM’s general manager in the Netherlands.

WM said the fixed income component of the index returned 4.2% while real estate was up 10.3%.