Stichting Pensioenfonds ABP, Heerlen, Netherlands, plans to add new allocations of €4 billion ($5.17 billion) each to global infrastructure and "innovative" strategies, as well as increasing its existing private equity and hedge fund allocations, as part of the fund's new three-year investment strategy, Roderick Munsters, CIO of the €209 billion pension fund, announced today. Global infrastructure will now be considered a separate asset class; the plan currently has €700 million in infrastructure through its real estate portfolio. The innovative-strategies money will be used to incubate "promising new investment ideas" from internal staff and external money managers, said Tom Steenkamp, director of allocation and research.
The fund's private equity allocation will be increased by one percentage point to 5% of assets, and hedge funds will be increased to 5% of assets, from 3.5%. Funding for the changes will come from reducing the plan's real estate allocation by one percentage point to 9% of assets, and cutting international equity exposure by 2 percentage points to 32% of assets. The plan also increased indexed fixed income to 7% of assets from 4% of assets. It decreased its overall bond portfolio to 40% of assets from 44%. Convertibles remain at 2%.
As part of the new strategy, the plan will categorize its asset classes into two portfolios according to their risk-return profiles. The change was made to more closely link the management of assets and liabilities and optimize the investment management of both portfolios, Mr. Steenkamp said.
ABP also announced plans to integrate environmental, social and governance criteria into the financial analysis of two internally run equity portfolios totaling €22 billion.
ABP reported a 9.2% return on investments for 2006.