Dutch pension fund ABP posts 2.8% return in Q3'20
ABP, which manages pensions for employees from the Dutch government and educational sector, has achieved a positive net return of 2.8% (or €12.8bn) in the third quarter of 2020. In Q3’20, the largest Dutch pension fund has yielded positive quarter-on-quarter in all asset classes to the exception of real estate (-1,3% qoq). ABP’s net yield amounted to 0.1% in fixed income, 4.6% in equities and 1.9% in alternatives. Emerging markets bonds (-2.8% qoq) have drawn ABP’s quarterly fixed income yield down whereas their equity peers have returned a net 6.4% qoq. In the alternative pocket, the Dutch pension scheme has posted net returns of 8.1% in the private equity asset class over Q3’20.
Nonetheless, ABP’s net return for the nine first months of 2020 remains in negative territory at -0.3% (or - €1.6bn). Without the overlay management (+ €10.3bn for the first nine months of 2020), ABP has actually lost a net €11.9bn in portfolio management (or -2.5%). Since the start of the year, the pension fund has suffered a €5bn commodity blow as well as a €6.7bn loss in the property asset class among others.
The pension fund’s assets increased over the quarter to €463bn at the end of September from €451bn as at 30 June 2020. ABP said it is “still in the danger zone” regarding its fund ratio that amounted to 88.2%. Its fund ratio target set for the end of 2020 is 104.2%. If ABP’s ratio is lower than 90% at the end of December 2020, the pension fund will likely cut pensions in 2021.