NETHERLANDS - PGGM is looking to inject a further E200m into hedge funds in a move that is likely to result in manager searches.
The E45bn scheme said that it will tender for up to two hedge fund of fund managers and will consider applications from both Europe and the US.
It added that emerging markets would be excluded, but did not disclose any further strategic details.
Asked why PGGM opted for the fund-of-funds route, head of alternative investments, Leo Lueb, said: “This is a new asset category for us, and we want to learn from our managers.
“Although transparency is a touchy subject, we believe that we don't need to hear from [them] about the transaction level data of underlying managers. [But] we do want to monitor is risk control.”
In January PGGM hired two undisclosed managers to oversee an initial E371m (US$400m) allocation into global hedge fund of funds.Lueb added that similar selection criteria would be employed for any new appointments.
“We have looked for managers with a solid process and an institutional discipline.
“Other important factors are the portfolio construction process, solid infrastructure, reputation, length of track record, and the balance between qualitative and quantitative processes. We avoided the super large, and super small.”
A decision on whether to tender could be made by September.
Zeist-based PGGM is currently rethinking its entire investment strategy following a -6.9% fall in capital value last year. Funding levels also fell by 18% to 106%.
The scheme blamed sharp declines in equity markets, but was buoyed by a robust commodities folder which was up by 63.8% on 2001.
First quarter returns, 2003, also disappointed with a -1.9% drop in assets. PGGM again cited sliding volatile markets.
PGGM, which covers the Dutch health- and socialwork sectors, invests 45.5% in equities; 30% in bonds and 24.5% in alternatives, including real estate, hedge funds, private equity and commodities.
The scheme does not use a consultant.
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