NETHERLANDS - The average pension fund in the WM Performance Services Dutch universe returned 14.8% in 2005, up from 9.9% in 2004, the highest overall return since 1999.
WM Performance Services, the European performance measurement arm of State Street, said this figure, which included return from currency hedging, represented a real return in 2005 of 12.9%, accounting for inflation. It said 2005 marked the third consecutive year of positive returns for Dutch pension funds.
According to the WM report, new investments were tilted to bonds, a trend which it said was mostly driven by imminent regulatory requirements as laid out in the new Financial Assessment Framework (FTK).
Fixed income investments performed adequately due to marginally decreasing European interest rates during 2005. Eurobonds returned 7%, and international bonds, including high yield bonds, returned 13.4% for the year, excluding the impact of currency hedging. Equities returns for the average fund were 31.2%.
High underlying returns for private equity, at 32.6%, commodities at 28.7%, and hedge funds at 14.1%, were reported, and WM said pension funds continued to adopt diversification strategies.
Property returns were up 14% for the year, while real estate funds were up 27.1%.
Its universe comprises pension funds encompassing more than e224bn in invested assets, but does not include ABP and PGGM.
By Lisa Haines
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