NETHERLANDS - The EUR49bn Dutch super fund PGGM has posted what it calls a "disappointing" negative 6% return for 2001, a result it attributes to its private equity portfolio.
According to PGGM, the dramatic fall experienced by its private equity portfolio - combined with turbulent equity markets - resulted in the poor 2001 return. Last year, private equity was the fund’s star performer, returning 32.9%. However, at the end of 2001, PGGM’s private equity investments posted a negative 24.8% return.
In addition to the poor private equity return, equities and commodities produced significant losses. PGGM’s equities portfolio posted a return of -12.7% for 2001, nearly three times the -4.4% posted the previous year. Returns from commodities - like private equity - fell spectacularly in 2001. Last year the portfolio returned a negative 32.8%, as opposed to the 12.1% result in 2000.
Even PGGM’s best performing asset classes, real estate and bonds, saw their returns fall from 2000 performance levels. Real estate posted a 9.8% return for 2001 whilst fixed income returned 6%. PGGM’s results for the previous year were 14.2% and 7.5%, respectively.
As a result of its poor performing investments, PGGM underperformed its own internal benchmark by 0.9% and the WM benchmark for Dutch pension funds by 3.2%.
Despite this, PGGM pointed out that its average over the past five years is “significantly” better than that of the WM benchmark. Whilst the WM universe - composed of all Dutch pension funds with the exception of ABP and PGGM - posted has a five year average return of 8.6%, PGGM’s average is 10.9%.
By Geoffrey Ho
This week's edition of Professional Pensions is out now.
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