First-half returns at Dutch scheme SPMS lifted by interest rates

first_imgThe scheme for medical consultants also reported a return of 1.8% over 2013.As a consequence of rising interest rates last year, the scheme’s liabilities decreased, boosting funding by 4.2 percentage points to 116.8% at year-end.SPMS said its coverage ratio included its annual unconditional indexation of 3%.Last year, the pension fund’s 36% equity portfolio returned 17%, with investments in Japan, the US and Europe returned 50%, 28.5% and 27.2%, respectively.The four hedge funds in its alpha mandate returned 8.5%, outperforming its benchmark by 4.8%.However, rising interest rates caused a 5.4% loss on its 43% fixed income holdings, as well as a 4.1% loss on its interest hedge.Emerging market debt lost 12.5% over the same period.The scheme’s credit holdings varied, with European corporate bonds returning 4.7% and US investments losing 4.4%.The scheme also lost 7.8% on inflation-linked bonds.Non-listed property returned -1.2%, against a benchmark of 6.5%, whereas listed real estate returned 4.4%.SPMS reported costs for pensions administration of €444 per participant last year and said it spent 1.12% of its assets on asset management, including 20 basis points for transactions.The scheme provides pensions for 8,000 self-employed medical consultants and more than 6,500 pensioners. SPMS, the occupational pension fund for Dutch medical consultants, has produced an 11.2% return over the first six months of 2014 on the back of positive investment performance and falling interest rates.The scheme attributed the result, in equal measure, to investment returns and a 70% hedge – using swaps – on the interest risk of its liabilities.Over the first two quarters of the year, the pension fund’s assets rose to €7.8bn, while its coverage ratio improved by 3 percentage points to 120%. However, the pension fund took pains to point out that, were its funding discounted against market rates rather than against the three-month average and application of the ultimate forward rate, its coverage would drop from 115% to 112%.last_img

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