NETHERLANDS - ABP, Europe's biggest pension fund, returned +6.9% in the second quarter and has submitted a recovery plan to the Dutch regulator, the PVK.
Yields were buoyed by positive returns in equities (+14.0%) and alternative investments (+8.2%), reflecting improved market sentiment after a relatively quick resolution to the Iraq war. The figures amounted to a total asset growth of e9.9bn to e142bn.
The fund’s coverage ratio at 4% nominal interest rate - PVK standard - also rose to 104%, from 99% quarter-on-quarter. But despite posting a marked improvement on a disappointing first quarter - when ABP posted with a total return of –2% - asset management chief, Jean Frijns, remained cautious on market prospects.
He said: “The effect of the decreasing uncertainty came through powerfully in the markets. Does this mean the problems are all behind us? No way. The economic situation still doesn’t look good, not in the US and certainly not in Europe.
“In our investment policy we try to respond to these developments as much as possible without losing sight of the long-term picture.”
ABP said that it plans to stick to its current investment strategy between 2004 and 2006.
“Essentially, the strategy implemented in 2000, based on broader diversification, will be continued,” said ABP.
“Broader diversification by investing in a variety of alternative investment categories as well as by shifting emphases within shares (convertibles) and fixed-income securities (index-linked bonds, non-government bonds). In comparison to the current portfolio, there will be a limited expansion in shares”
The structure of the strategic asset mix is: 36% in shares, 44% in fixed-income securities, including index-linked bonds and 20% in alternative investments.”
Last week’s recovery plan, submitted to the PVK (Pensioen & Verzekeringskamer), the Dutch pensions and insurance supervisory authority, was geared towards strengthening the fund’s financial position.
The new plan aims to give rise to an old age pension and surviving dependant's pension premium of 22.4%, from 15.2%. In salary terms, the new percentage is approximately 13.5%, from 9.1%.
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