NETHERLANDS - Listed property was the best-performing asset class for the €5bn Dutch pension scheme for chemical giant DSM in 2010, when it returned close to 30%.
In its annual report, published this week, the fund attributed returns of over 38% in North America, 31% in Asia and 19.4% in Europe to a stabilising world economy and worries about future inflation.
The Stichting Pensioenfonds DSM Nederland reported an overall return of 10.2% over last year, outperforming its benchmark by 1.8 percentage points, while its listed real estate portfolio returned of 29.1%.
The scheme's equity portfolio, accounting for 32.4% of investments, yielded 17%, with the result mainly down to 27% returns in its emerging market holdings.
Meanwhile, DSM's 56% fixed income holdings generated 3.9%, while alternatives returned 14.9%, after an increased allocation to infrastructure and renewable energy, according to officials.
The DSM fund's board indicated that it has decided to keep its strategic investment portfolio unchanged, but to introduce a dynamic investment policy with reviews triggered by falls or rises to set funding levels.
A new balanced management strategy - in co-operation with its pension provider DPS and an external consultant - is aimed at an integrated approach of all financial risk, it added.
Following a strategic study, the board said it has reduced the number of its members from 16 to 10.
Additionally, it has replaced its advisory committees with board members tasked with specific areas of interest, and it is now fully discussing all relevant issues during full board meetings.
The DSM fund further made clear that it also kept the hedge - in part through swaps and swaptions - of the interest risk on its liabilities at 75%.
Its 65% currency hedge - through an externally managed overlay - contributed -1.5 percentage points to the scheme's result, following the appreciation of both the Japanese yen and the US dollar.
The DSM fund saw its funding ratio decrease by two percentage points to 109%, as its return on investments could not compensate for dropping interest rates - the criterion for discounting liabilities - as well as increased longevity.
In 2010, the pension fund had to account for a 1.3% increase in longevity risk, in addition to a 4% increase implemented the previous year.
PDN said it granted its 16,155 active participants a 1.9% indexation, while increasing the pension rights of its 14,950 pensioners and 7,895 deferred participants by 1%.