NETHERLANDS - Dutch pension fund giants ABP and PGGM have seen their returns slide in the second quarter of 2004 on the back of rising oil prices and interest rates.
ABP and PGGM posted returns of 0% and 0.5% respectively as compared to 4.3% and 3.5% in the previous quarter. At the end of the first half, ABP returned 4.2% while PGGM’s returns stood at 4.1%.
PGGM said that the Q2 results were mainly due to equities portfolio, which returned 0.9%. High interest rates globally saw bonds decline to –1.1%.
Roderick Munsters, PGGM’s CIO said: “Dominant factors affecting the global economy in the second quarter of 2004 were rising oil prices, inflation and capital market interest rates.
“All other asset categories (with the exception of bonds) again showed a positive return in the second quarter. The return on the commodities portfolio was good (second quarter: +4.0%; first half: +14.7%) and the private equity portfolio staged a strong recovery, with a return of 7.6% for the first half-year, due largely to several successful exits, the flourishing IPO market and the first signs of appreciation of our existing equity interests.”
Invested capital of the fund rose marginally to e55.7bn as at Q2 2004 from e54.9bn in the previous quarter.
Taking the new Q2 results into account, PGGM’s five year average has dipped to 3.9% from 4.7%.
The pension fund said that in accordance with its corporate governance code, it has attended the AGMs of several quoted companies in the Netherlands this year and now votes, either by attending or remotely (proxy voting), at the AGMs of around 1,000 major companies around the world.
Following recommendations of the Tabaksblat Committee, PGGM has also entered into a dialogue with a number of quoted companies.
The fund said that the “trial run” of the Tabaksblat code— which comes into force in 2005—has already started having an effect.
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