NETHERLANDS – Stichting Pensioenfonds ABP, Europe’s largest pension fund, is currently in the process of establishing its new strategic investment plan to run from 2007 to 2009.

According to a spokesperson for the scheme, such plans are “cyclical”. The scheme currently has roughly 43% invested in fixed income and 55% in equities, real estate and real estate funds, private equity and commodities. A further 2% is invested in hedge funds.

The spokesperson told IPE that the new investment plan is likely to be released at the end of summer. He declined to comment on any broad investment changes that are likely to occur.

The Heerlen-based fund said its coverage ratio at the end of the first quarter reached of 2006 reached 132% - up from the end-2005 figure of 120%.

The driver for this was higher interest rates, said finance chief Dick Sluimers, speaking at a presentation of its new annual report.

He also indicated that if the current developments continue to improve issues such as full indexation or even lower premiums could be a topic for discussion again.

The latter will not be put into place before the end of 2006, as full indexation and repairing the missed indexation in former years will have a priority. According to the DNB, the supervisor, ABP, as most other pension funds, is requested to have at least a coverage ratio of 125%.

Speaking at a presentation of the civil service scheme’s annual report Sluimers also indicated that even that ABP has reported an overall yield on investments of 12.8%, the fund is still wary of possible threats in the future.

ABP’s current success is partly based on the increased interest rates. As Sluimers stated, the effective yield on ABP’s long-term bonds has increased from 3.7% to 4.15%.

Sluimers noted that a 1% point change in interest rates changes the coverage ratio by 17%.

In contrast to most Dutch pension funds, the duration of ABP’s fixed interest portfolios very short, only around five years.

Munsters said current investment strategy and asset class divisions would stay the same. Developments on the financial markets, dollar position and commodities were not giving any reason to change the already established portfolio dramatically.

Munsters also indicated that the current equity stake in real estate fund Vesteda would be (partly) divested, as stated before. However, a suitable buyer has not yet been found.

Sluimers indicated the fund would increase its current 20% stake in ‘life-course’ subsidiary Loyalis in the coming year to 100%. The fund will release full first-quarter figures next week.

Separately, Bloomberg News has quoted ABP’s equities head Edwina Neal as saying the fund is looking at Asia.

“We are favouring those sectors like energy, materials and capital goods that are geared toward the healthy infrastructure development of countries like India and China,'' Neal was quoted as saying in an interview.

She was quoted adding: “The way we are positioned regionally at the moment our bias is towards the Asian markets and away from the western markets.”

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