NETHERLANDS - Dutch pension funds returned 5.1% in difficult conditions for the year through August 31, according to results of the Dutch Pension Fund Index released by investment performance measurement consultancy The WM Company.
A rise in inflationary expectations in the second quarter of 2004, which pushed bond yields higher and led to a sell-off in equity markets in May, drove the overall returns, The WM Company said in a release.
Institutions moved away from sectors perceived as sensitive to market moves toward more defensive sectors and investors appeared to favour European-based investments at the expense of Asian markets such as Singapore, Thailand and Hong Kong, it added.
“These defensive moves convey a broad sense that institutions seem to be taking a less optimistic view of the investment climate,” commented Robert Rijlaarsdam (pictured), general manager of the WM Company in the Netherlands.
The company said the dip in investor confidence coincided with the first rises in the US interest rates for almost four years. In this environment, the fixed income component of the Pension Fund Index achieved a cumulative return of 4.2%.
Indirect real estate investments (listed real estate funds) have skyrocketed to return more than 21% for the year, fuelling high returns for the real estate asset class, which is up to 10.3% for the year.
The WM Company, based in Edinburgh, is a wholly owned subsidiary of State Street Corporation.
The index provides an indication of the expected return of the WM Dutch Pension Fund Universe and is based on the returns of standard market indices and on the asset allocation of the Universe as of the end of last year.