Close Close

Portfolio > Alternative Investments > Hedge Funds

Dutch Pension Fund Allocates to Funds of Funds

Your article was successfully shared with the contacts you provided.

RIJSWIJK, The Netherlands (–Stichting Pensioenfonds TNO invested 30 million euros (US$36.5 million) in two multi-manager, multi-strategy fund of funds managed by the London office of Pacific Alternative Asset Management Company LLC, Irvine, Calif., and EIM Group (UK) Ltd., London.

According to separate statements from PAAMCO Europe and EIM Group, the 1.3 billion euro (US$ 1.6 billion) Stichting Pensioenfonds TNO plans to increase its allocation to the two funds of funds managers to as much as 50 million euros (US$60.5 million) each in the next 12 months.

Pension fund officials reviewed proposals from 16 funds of funds in Europe and the United States before selecting PAAMCO and EIM, said Eric van Ballegooijen, director of Stichting Pensioenfonds TNO, in a statement.

The fund, Mr. van Ballegooijen said, was looking for further diversification of its equity portfolio and wanted investments that had low correlation with listed markets.

“The first reason contributes to a lower risk profile and the second reason is more fundamental, since the pension industry is in fact an absolute return business given its liabilities,” Mr. van Ballegooijen said. “It cannot be driven by beating benchmarks.”

PAAMCO officials said the Stichting Pensioenfonds TNO allocation represented the first hedge fund allocation on the part of a mid-sized pension fund in the Netherlands. To date, only the largest funds had made hedge fund allocations.

“This could be the start of a significant trend as more pension funds in the Netherlands recognize the investment and diversification benefits of allocations to alternative assets and their consultants equip themselves to provide both asset allocation and manager selection advice in the area,” said Stephen Oxley, managing director of PAAMCO’s London office, in a statement.

Hilton Supra, senior marketing manager for EIM Group (UK), said Stichting Pensioenfonds TNO’s allocation to funds of funds represented further “bold steps Dutch pension funds are taking by allocating some of their assets to hedge funds.”

[email protected]