KLM pension funds, with a combined 14 billion guilders ($6.9 billion) in assets, will be turned over to external managers by year end.
The assets, formerly invested solely in the Netherlands and Germany, are being diversified internationally. Equities are being boosted to 39% from 31% and bonds cut to 49% from 57%. Real estate will remain at 12%, said Lou ten Cate, consultant with Wilshire Europe and interim head of the funds. Further increases in equity allocation are possible.
The funds for ground staff, pilots and cabin crew will invest 50% of developed markets equity - some 2.3 billion guilders ($1.14 billion) - in passive strategies. Barclays Global has been hired to run a 275 million guilder indexed Japanese stock portfolio.
Passive U.S. and European equity briefs are expected to follow shortly. The funds also will hire managers for active Europe, U.S. and Japanese mandates. Overall, equities will be split 60% in Europe, 15%. U.S., 10% Japan and 15% emerging markets.
The funds probably will hire one manager to run separate large-cap mandates for the three developed-market regions. In addition, small-cap mandates for Europe and the United States also are under discussion.
One or two global bond mandates - accounting for 49% of total assets - probably will be awarded later this year.