NETHERLANDS - Asset manager PGGM has sacked over a dozen external asset managers for underperformance of their actively-managed portfolios and moved a ninth of its assets into passive management.

PGGM, which manages over €88bn in assets for the healthcare pension fund Zorg en Welzijn, has withdrawn €10bn of assets from actively-managed equity and fixed income portfolios, said PGGM's spokeswoman Ellen Habermehl.

The scheme missed returns of approximately €500m last year, because the actively-managed portfolios consistently fell short of PGGM's internal benchmark, she said.

PGGM, which declined to name the sacked asset managers, has instead decided to invest the freed assets in passive portfolios and Habermehl confirmed a considerable sum has been placed with Barclays Global Investors.

"Meanwhile, we are researching other active strategies for mature and liquid fixed-income and equity markets," she said, while stressing there will not be a return to traditional alpha strategies.

PGGM announced last year it planned to double its concentrated risk investments in 2007, placing some of its assets in catastrophe bonds.

Else Bos, chief investment officer, indicated PGGM's change of direction follows the separation of the scheme's active and passive investment mandates, which has made clear how and where returns are achieved.

According to PGGM, approximately 50% of the withdrawn actively-managed assets were managed by external parties, while the remaining assets were internally managed.

Commenting on the decision, Rob Bauer, professor of institutional investment at Maastricht University, said: "PGGM is very courageous to end its active investment policy and to go public about the reason. However, I can understand their decision, because it has never been proven that a larger group of asset managers has been able to consistently beat the benchmark within equities.

"Given the risks and costs of active management, it is very difficult to add value. Equity markets, and to a large extent also fixed income markets, are already very efficient," Bauer added.

In his opinion, the disappointing performance of actively-managed portfolios has been little highlighted, because there is scarce information available about returns of specific institutionally-managed portfolios.

PGGM is the asset manager and pension administrator of the Pensioenfonds Zorg en Welzijn. It manages the pension assets of over two million employees and former employees in the healthcare and social work sector.

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