APG Asset Management, the manager of Stichting Pensioenfonds ABP, Heerlen, Netherlands, reported assets under management fell 2.3% to €459 billion ($518 billion) in 2018, recording an average return of 6.9%, it said in an annual financial update released Thursday.
As of Dec. 31, APG managed €139.5 billion in fixed-income assets down from €149 billion a year ago. Amounts in other asset classes were unchanged: €173 billion in developed and emerging markets equity; €30 billion in real estate; €19 billion in commodities; €17.9 billion in hedge funds; and €19.7 billion in tactical real estate.
The figures do not take into account currency or interest rate risk-hedging.
Corporate credit investments returned 2.2% in 2018, compared to 2% in the last three years and 5.4% in the last five years. Eurozone government bonds returned 0.1% in 2018, 1% over the last three years and 3.5% in the five-year period. All multiyear returns are annualized.
Developed market equity investments returned -4.4% in 2018, compared to 5% over three years and 8.8% over five years. APG's emerging market equity portfolios returned -11.8% in 2018 vs. 7.8% over three years and a 6.1% return over five years.
Hedge funds returned 2.4% in 2018, compared to 4.5% over three years and 3.6% over five years, while real estate investments were up 3.9% vs. 5.2% and 12% for the three- and five-year periods, respectively. Commodities returned -13.8% in 2018, compared to 2.3% over three years and -13.9% over five years.
"What I found the most challenging were the external circumstances. We're working hard on pension value: Our aim is to create as much value as possible for every euro that participants put into their pension." Gerard van Olphen, chairman of APG's executive board, said in a news release.
"At the same time, the market continues to be plagued by the prospect of cuts due to low interest rates," he said. "The lack of a pension agreement also continues to decrease the confidence of participants and public support in general. That doesn't make it easier."