Pensionskasse Degussa, the pension scheme of the German chemicals company Evonik, with assets under management worth €5.72bn, has revamped its fixed-income portfolio with investments in government and corporate bonds, it said in its recent annual report.

The pension fund took advantage of an increasing level of interest rates to boost its fixed-income allocations, a strategic shift after years spent to expand its private market investments.

The scheme splits its investments into two large sub-portfolios, one for direct investments in fixed income pursuing a classic ‘buy and hold’ approach, and the other being a Masterfonds made up of a large number of different, well-diversified asset classes in different sub-segments.

Last year a new round of investments was made in the directly held fixed-income portfolio with a relatively long duration, the report added.

In the Masterfonds, the Pensionkasse progressed with further investments in European corporate bonds, while holding back on real estate and infrastructure, it noted.

The largest share of assets in the Masterfonds, totalling €3.35bn, is invested in real estate and infrastructure, and the remaining share in government, corporate, and emerging market bonds, and absolute return, private markets, high-yield and equity investments.

The scheme invests both in infrastructure equity and debt, with commitments amounting to €965m in 2023, according to the report. It expanded to a certain degree private equity and private debt allocations in 2023.

Investments in bearer bonds and other fixed-income securities increased year-on-year, from 23.06% in 2022 to 25.04% in 2023, whereas allocations to registered bonds remained stable at 11.70% of total assets.

It invested 59.50% of total assets in equities and investment funds, relatively unchanged from 59.82% in 2022.

Private equity investments increased slightly to 3.30% of total assets last year, from 2.72% in 2022, it said. Promissory notes and loans, and deposits at credit institutions made up 0.18% and 0.28%, respectively, invested in 2023.

The scheme returned 5.5% last year, earning €191.10m, up from €182.61m in 2022, according to the report. Its hedging strategy was “very expensive” in 2023 as a result of stock market volatility, it added.

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Luigi is IPE's Berlin-based DACH correspondent. His coverage includes regulation and the latest pensions and investments trends, and, being a native Italian, he also covers Italy’s pensions market. He has reported from Italy and Germany on international politics and business for European and US publications including USA Today, Bloomberg BNA and for the investigative magazine L’Espresso. He was previously Germany correspondent for Mergermarket covering M&A.View full Profile

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