REAL ESTATE - The €190m (£127.85m) Members of European Parliament Pension Fund is moving away from bonds in favour of euro-zone property to increase the diversification within its portfolio.
The news was first announced in a press release by property investment firm Arlington Securities, which has been awarded by the fund with a €10m (£6.73m) euro-zone property mandate by the Luxembourg-registered scheme.
The money will be invested in the firm’s recently launched euro-zone fund of funds, which comprises a number of Euro denominated specialist sector focused funds and has a target return of 10% per annum.
"This investment reflects our decision to continue to increase the diversification within our portfolio and particularly to reduce the investments in bonds, where yields are currently very low," said the fund’s chairman Richard Balfe.
Balfe also said the fund wanted to diversify into property as it has a similar long-term nature to bonds, but has can produce higher returns.
About its choice to invest in a fund of funds, the scheme said: "it enables us to get a more diversified exposure to the property market than through other methods."
The MEP fund has recently come under scrutiny due to a lack of clarity about the definition of the liabilities and responsibilities of the parliament and scheme members in the event of a deficit in the MEPs' additional voluntary pension scheme, it was reported.