NETHERLANDS - The €1.1bn pension fund for pharmacies' staff PMA has managed to maintain a cover ratio of approximately 185%, despite experiencing  a 23 percentage point drop in the first half of 2008.

The scheme reported an overall return of 2.4% in 2007, of which 0.7% was attributed to the hedging of over 50% of its US dollar risk.

PMA's equity investments - comprising 50% of its total assets - returned 4.5%, and emerging Asian country equities were top performers, yielding 36.6%, said the scheme's CEO.

In contrast, fixed income returned -0.1%, mainly because of the performance of long-term European government bonds.

During the second half of last year, PMA switched the management of its fixed income portfolio to two external managers, having previously had its investments internally-managed in part while the remainder was invested in fixed income funds.

These new managers have been given a mandate to take a "limited currency risk" in order to generate extra returns.

"So far, we haven't experienced negative effects from this set up, although it is quite early for a proper judgement," Marcellino Kropman, chief executive of PMA, told IPE.

PMA's property also saw a negative yield of -4.2% and the asset split within that showed very contrasting results as listed property produced a negative performance of -32.7% while the scheme's participation in direct real estate returned up to 20%, according to the scheme's annual report.

The pension fund's allocation to fixed income and property were 30% and 18% respectively while its 2% allocation to liquid assets returned 4.3%.

Instead of a long-term strategic portfolio, the Stichting Pensioenfonds Medewerkers Apotheken applies a dynamic asset allocation.

"In the case of rising interest rates, we raise the hedge through government bonds," Kropman stated.

The scheme already increased its interest risk hedge last summer, when long-term interest rates were at their highest, details of the annual report also revealed.

"In order to secure its continuity and to become less dependent on third parties", PMA has also acquired a stake in its main software provider Klantenconsortium Innovact.

PMA granted its 21,510 active participants, 8,375 deferred members and 3,485 pensioners an indexation of 1.25% over 2007. The scheme has over 1,900 affiliated pharmacy sponsors.

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