NETHERLANDS - With returns of 47.2%, alternatives were the best performing asset class in 2007 for the €9.8bn pension fund of the printing and publishing industry PGB.
The scheme, which has allocated 2% of its assets to alternatives, attributed the spectacular returns to commodities in its annual report.
PGB also reported overall returns on investments of 5.5%. However, the effect of interest rate swaps led to an overall result of 3%.
To decrease interest rate risk, PGB had committed itself to €2.8bn of interest rate swaps, and also purchased reciever swations to protect its funding ratio.
The fixed income portfolio - comprising 47% of assets - returned 2%, while the 42% equity portfolio yielded 6.9%.
PGB's overall property investments also performed well overall, returning 10.2%, with direct real estate and listed property yielding 27% and -15% respectively.
The scheme will increase its allocation to real estate from 8% to 10% of its assets, mainly by investing in a participations portfolio, it indicated.
As part of a new investment policy, PGB will allocate 2% of its assets to sustainable investments such as water, energy and waste management, while alternatives will be extended with infrastructure, at the expense of its fixed income portfolio.
In addition, investments in commodities and hedge funds will be increased to 3% and 2% respectively. PGB also mentioned private equity investments as an option for future investments.
Last year, the pension fund completed a placement of 90% of its equity with a worldwide network of specialised asset mangers with differing mandates. Only the managed part of its European equity was left with its provider GBF.
The scheme's coverage ratio rose from 137% to 148%, allowing for overall indexation of 2.09%. Its required minimum funding ratio is 118%.
PGB aims to broaden its base by developing into a pensions provider for the media, communication and publishing sector, with the aim of becoming one €20bn-25bn scheme for the entire sector, it said.
Several publishers, such as Boom Uitgevers and Wolters Noordhoff, have already decided to place their schemes with PGB in 2007, it said.
PGB has 44,430 active participants, 190.140 deferred members and 55,220 pensioners.
If you have any comments you would like to add to this or any other story, contact Carolyn Bandel on +44 (0)20 7261 4622 or email carolyn.bandel@ipe.com
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