NETHERLANDS - Dutch pension funds acquired a record €12bn in equities during the second quarter of this year, to compensate for the loss of value in equity investments elsewhere, pensions regulator De Nederlandsche Bank has revealed.
Schemes also allocated €7bn to investment funds along with €3bn to fixed income in the same period, according to the DNB.
Despite decreasing valuations, pension funds' securities investments rose by €10bn to a total of €624bn at the end of June, the regulator calculated.
DNB attributed the schemes' appetite for equity in part to their desire to rebalance the strategic ratio between their equity and fixed income portfolios, after a 3% drop in value of equities during the first quarter.
Certain stocks are also considered to have become interesting again, thanks to a further decrease of valuations, the pensions watchdog explained, noting over 50% of the purchases were in US equity.
Contrary to the first quarter, when pension funds divested a considerable amount of fixed income or swapped bonds for equity, schemes acquired €3bn of fixed income, mainly long-term US government bills (Treasuries) and British banks' bonds.
According to DNB, pension funds financed a large part of their securities purchases by eating into their deposits as well as not renewing short-term loans.
"During the first quarter, dominating caution probably led to the issuing of short-term loans, which were freed-up for investment in the second quarter," DNB suggested.
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