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Dutch pension funds return 14.6 per cent in 2009

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Dutch pension funds returned 14.6 per cent in 2009, as measured by State Street Investment Analytics.

It was a strong year for risk assets – the equity holdings of funds in the WM Universe Dutch Pension Fund achieved a return of 32.5 per cent, well ahead of the FTSE World Index which produced a return of 30.2 per cent.

The return of 14.1 per cent generated by the universe’s fixed income assets was driven by corporate bond investments: the Merrill Lynch EMU Corporate Bond Index returned 14.9 per cent over 2009.

By contrast, lower risk investments – government bonds and cash – provided modest returns.

The returns in 2009 represent a partial recovery from 2008 with the collapse of credit markets and the sharp economic recession which followed.

Changes in the universe asset mix over 2009 were largely the result of relative market movements. Consequently, equity exposure increased from 27.6 per cent at the end of 2008 to 32.5 per cent at the end of the current year. Fixed income exposure fell from 53.7 per cent to 50.0 per cent.

During 2009, the financial position of the pension funds within the universe has improved. Based on market values, the average coverage ratio of 99 per cent at the start of 2009, increased to 111 per cent by end year. This was due to the rising value of funds’ assets during the period, rather than changes to the value of liabilities.  However, the average coverage ratio remained below the regulatory required level of 126 per cent.
 

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