VBV Vorsorgekasse, the severance payment fund of Austrian VBV Group, has returned 0.26% in the first three quarters of the year, below the pension funds’ average of 1.22%, according to the Österreichische Kontrollbank (ÖKB), as it continues to pursue a prudent investment strategy.
“Held to Maturity” and loans pushed up returns of the severance payment fund in Q3, while equity investments posted losses in the third quarter but small gains considering the whole investment year, it said.
Bonds ended the third quarter with a negative return, while money market investments, real estate and alternatives recorded small gains so far this year, the scheme said.
VBV Vorsorgekasse recorded annual returns of 2.23%, above the average of Austrian pension funds of 1.97% per year, since ÖKB began measuring schemes’ performance in 2004.
The provident fund has the largest asset allocation to bonds (44.86%), “Held to Maturity” and loans account for 21.56% of total assets invested, 10.66% in equities, 9.48% in real estate, 5.72% in alternatives, 4.83% in money markets, and 2.89% in cash, according to the scheme.
VBV Vorsorgegasse shifted to a more cautious investment strategy due to a persistently difficult and challenging market environment, therefore recording a return of 0.26% in the first three quarters of the year, said Andreas Zakostelsky, chair of the board.
VBV has shied away from risky assets, particularly credit and equity, strongly diversifying foreign currency risks, and has also “significantly and temporarily” reduced interest rate risk, and built up a higher cash ratio, Michaela Attermeyer, member of the management board, told IPE.
The scheme recorded a negative return in the first half of the year (-5.53%).
The scheme had also decided to increase its exposure to bonds as interest rates were rising, cutting equities.
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