NETHERLANDS - Dutch pension funds must continue to post positive investment returns to restore the funding positions of many schemes, according to WM Performance Services, the European performance measurement division of State Street.
Releasing the return results of the 2004 Dutch Pension Fund Index (DPFI), which posted a return of 2.8% in the fourth quarter and an annual return of 8.4% excluding the impact of currency hedging, Robert Rijlaarsdam, WM’s local manager in the Netherlands, said: “Last year’s returns look promising, but they should be viewed in the broader context of the Dutch pension fund landscape.
“Changing regulations (nFTK and IAS 19), the low interest environment and improving longevity have had a big impact, and continued positive returns are needed to restore the funding positions of many pension schemes.”
WM said the fourth quarter return was boosted by “decent positive equity market returns”, although the declining dollar remains relatively weak and a source of discomfort to European exporters, the firm added.
“On the whole, with two years of positive growth behind them, Dutch pension funds have recovered most of the losses they sustained during the savage equity bear market occurring between 2000 and 2002,” WM said.
Equities posted a return of 12.6%, emerging markets 16.9% and the pacific ex-Japan region 20.2%. Technology shares underperformed, while Eurobonds, private loans and mortgages performed relatively well, with returns around 7%.
Property was up 16.4% for the year, with real estate funds contributing 38.3%.
The index provides an indication of the expected return of the WM Dutch Pension Fund Universe and is based on the returns of standard market indices and on the asset allocation of the Universe as of the end of last year.
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