NETHERLANDS - Dutch pension funds have increased their exposure to the equity markets in 2003, following the sharp rebound in the global equity markets, according to the Dutch Association of Industry-Wide Pension Funds or the VB.
The VB said that Dutch pension funds had increased their average weighting of shares in investment portfolios from 36% in 2002 to 40% at year-end 2003.
“The increase largely reflects rising share prices in the course of 2003. Pension funds continue to adhere to the assumption that variable-yield securities generate better returns in the long term than fixed-interest securities,” the association said.
Funds have also sustained a spread of investments, both generally and internationally.
Pension funds returned an average of 11.4% in 2003 with returns ranging from 4.3% to 15%.
The VB said that the strong recovery in pension fund returns had contributed significantly towards a stronger financial position for funds.
However, the association added that returns on investments were still uncertain.
“Although yields showed some recovery in 2003, that is not yet enough. If pension funds are to restore their shrunken buffer reserves, they need improved returns for a number of years in succession,” the VB said.
Over the past ten years, pension funds returned an average of 7.2% while over a five period, Dutch pension funds reported returns averaging 3.4%, mostly due to the negative turn the markets took in 2000-2002.
The VB said that investment in shares and in fixed-interest securities each gave returns of 6.5% for both categories over a ten-year period, while property generated returns of 10.5%.
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