BELGIUM - VKG, the e500m Belgium pension fund, is expected to allocate 5% to hedge fund of funds, following a review of its strategic allocation.
The fund is considering investing e20-25m either through a segregated account or through an existing undertaking for collective investments in SICAV (Société d'Investissement à Capital Variable).
Carl Haeck (pictured), finance manager said: “The segregated account route may be too expensive for us. We will look at all our options in the investment strategy meeting that will be held shortly. No decision has been made so far.
“Investments in hedge funds will give us absolute returns and will also reduce volatility in the overall portfolio. We have some cash provisions and we may also reduce exposure to bonds to make way for the new investment in hedge funds.”
VKG’s asset allocation stands at 45% equity, 45% fixed income and 10% real estate.
Meanwhile, Gartmore has been replaced by Martin Currie as the new manager for the e25m Japan mid-cap mandate.
Gartmore had asked to be released from the mandate as it lacked resources to deal with VKG’s shift from Japan small-cap to mid-cap.
The fund which used to concentrate on doctors, dentists and pharmacists has decided to “broaden its focus” and is now targeting other “intellectual independents” such as lawyers and notaries.
“We already have about 40% of the doctor population in Belgium who are our clients so we need to look to other markets to be able to continue to expand,” explained Haeck.
The move is expected to substantially boost VKG’s standing as a pension fund for professionals and the fund is expecting premiums to rise by around 10-15% as a result of the new business. Currently, premiums stand at around e55m.
“There has been a lot of demand from other independent groups so we were happy to oblige. The changes to the statute have already been made and we have received a very good response in the first two months of expanding our business,” he added.
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