NETHERLANDS - The average Dutch pension fund returned 9.9% in 2004, marked by moves toward alternatives and emerging markets, according to WM Performance Services (WM). Accounting for inflation, this represents a real return of 8.6%.
Releasing the 2004 results of the Universe of Dutch Pension Funds, State Street Corporation’s European performance measurement arm said the result was just below the 10.7% return achieved in 2003.
“In their quest for alpha generation and risk diversification, it appears that Dutch pension funds have moved to alternatives and emerging markets,” said Robert Rijlaarsdam, WM Performance Services manager in the Netherlands.
WM said the search for diversification had led to growth in the popularity of private equity, commodities and hedge funds. Dutch funds also showed a “growing appetite” for investing in emerging markets such as China and India, the firm added.
In 2004, equities finished the year with returns of 9%. On the fixed income side, eurobonds, private loans and mortgages performed relatively well with returns of 7.3%, WM said. Property was a strong performer, posting returns of 11.9% for the year, with real estate investment funds up almost 33%.
However Rijlaarsdam warned: “The positive results of the last two years need to be viewed in context – the changing regulatory environment and the losses suffered at the beginning of the decade both continue to greatly impact the fortunes of many pension schemes.”
The universe excludes the e160bn ABP and e60bn PGGM, which returned 11.5% and 10.9% in 2004, respectively.
The 2004 Dutch Pension Fund Index (DPFI) posted an annual return of 8.4% excluding the impact of currency hedging.
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