At the European Patent Organisation in Munich, the managers of the pension reserve believe that the IPE country award they picked up last month was vindication of an investment strategy change in 1997 and the innovative approach of the fund’s supervisory board.
“In mid 1997 we changed our strategy and moved out of fixed income and into equities,” says Silvio Vecchi.
“But that alone could not provide the stimulus which we felt the fund needed, instead that had to come from the supervisory board. When we heard that we had won this award I think the management team felt that it confirmed our approach, and also gave us confidence to move ahead on the course we have plotted. We have used scientific methods in our investment strategy, and it seems to have paid off.”
He says he is not sure how the judges came to their decision, but says he feels a major factor was the outward looking approach to management that the supervisory board has shown. “We have to follow their decisions, but we are lucky that they have adopted a more adventurous approach than is normal in Germany. This has meant that we have built up a 65% equity holding, which is quite high by German standards. I think this also shows the strong bond of trust which exists between the administration and supervisory board.”
One of the most important things that the board has done is expand the definition of the traditional or domestic market to include the whole of the Eurozone. “This has allowed us to develop our investment in the domestic market, which is in fact the bulk of our investment. In the past German funds were very conservative investors, the approach of our board has allowed us to change that trend.”
Vecchi points out that the administration does try to exercise self-restraint, and says that it remains their strategy to avoid the big mistake rather than second guess the market.
“We have been very forward-looking on the risk management side, and starting this December we will be working with a consultancy group on a project which will take us through to the end of 2002 and on well into the future.”
He believes the awards have opened up new channels on the European scene. “Apart from recognising our day-to-day work, the awards have given us the opportunity to look at other companies and funds that are market leaders. Much of what we have seen has given us food for thought and challenged our own view of the future.”

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