APG Asset Management, the manager of ABP, Herleen, Netherlands, boosted assets under management 6.8% to €470 billion ($563 billion) in 2017, recording an average return of 7%, it said in an annual financial update.
ABP's assets increased 7% to €432 billion over the year. The largest Dutch pension fund returned 7.6% in 2017.
APG managed €173 billion in developed and emerging markets equity, €149 billion in fixed-income assets, some €30 billion in real estate, $19 billion in commodities, $17 billion in hedge funds, €9 billion in tactical real estate and $2.3 billion in absolute return. The figures do not take into account currency or interest-rate risk hedging. Total assets invested by APG amount to €470 billion.
Corporate credit investments returned -2.7% in 2017, compared to 3.4% in the last three years and 4.8% in the last five years. Eurozone government bonds returned 0.4% in 2017, 1.4% over the last three years and 3.9% in the five-year period. All multiyear return are annualized.
Equity investments returned 9.2% in 2017, compared to 10.5% over three years and 14.4% over five years. APG's emerging market equity portfolios returned 23% in 2017 vs. 10.6% over three years and a 7.4% return over five years. Emerging markets is broken out separately from the equity return.
Hedge funds returned 5.6% in 2017, compared to 4.1% over three years and 4.5% over five years, while real estate investments were up 3% vs. 9.8% and 11.3% for the three- and five-year periods, respectively. Commodities returned 7.4% in 2017, compared to -5% over three years and -11.3% over five years.
"In the past year, we have expressly aimed at increasing our pension value for our pension funds and their participants. In concrete terms, we want to offer participants the most income (for longer). By achieving good and sustainable returns on the one hand and reducing our implementation costs on the other, we have taken good steps in that direction in 2017," Gerard van Olphen, chairman of APG Group's executive board, said in a news release.
With investment returns expected to decline in the near future, APG is looking to access more alternative investments, the manager said.
