Pension fund for Douwe Egberts ramps up risk profile with new strategy

first_imgThe return portfolio is to be increased to 50% of total assets, partly by raising the allocation to developed-market equities from 25% to 30%.The DEPF is also thinking to increase exposure to indirect property and emerging market equities from 5% to 7.5%, while ramping up holdings in emerging market debt, from 2.5% to 5%.The scheme will divest its 2.5% commodity allocation entirely.The DEPF expects to maintain its new investment strategy for at least the next three years.As part of the portfolio reshuffle, it adjusted the allocation of the €50m financial reserve aimed at indexation for its 2,225 active participants, which had been fully invested in credit.It replaced one-quarter of the portfolio, which generated 9.7% in 2014, with develop-market equities.The scheme also introduced a dynamic interest-risk hedging policy – in increments of 35%, 50%, 65% and 80% – with the level of cover following interest rates.It will reduce the interest hedge from 50% to 35% this year as a consequence of the new policy.Last year, the Douwe Egberts scheme reported an 18.8% return.It warned that it may be unable to grant indexation on 1 January, as its official policy funding ratio was 110.9% as of the end of September.Under the new financial assessment framework (nFTK), pension funds are prohibited from paying inflation compensation if their policy coverage is less than 110%. The €1.7bn Dutch pension fund of coffee producer Douwe Egberts (DEPF) is planning to increase its return portfolio to increase the potential of generating long-term returns. The adjustment will come at the expense of its 60% matching portfolio, which the scheme will cut to 50% of total assets.The DEPF said it would reduce holdings in long-term government bonds and interest swaps from 31% to 25%, while lowering its credit allocation from 24% to 20%.It will maintain its residential mortgage exposure at 5%, however.last_img

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