Investment results

Checked on: 28 April 2022

Investment results

The investment policy is based on an investment portfolio that distinguishes between fixed-income and return assets. The distribution at any point in time is aimed at having a good chance of achieving our ambition in the long term, a pension that is stable in value for retired members and non-contributory policyholders and a welfare pension for active members, without the risks becoming too great.

The fixed-income securities largely consist of relatively 'safe' investments, which significantly secure part of the future expected pension benefits. Think in particular of government bonds with a spread within and outside Europe. It also invests in slightly riskier fixed income securities, such as corporate bonds and emerging market bonds. The higher risk is compensated by a higher return expectation.

More about our Investment policy

Do you want to know more about the choices made by Philips Pensioenfonds in its investment policy?

Go to Investment policy

The investments with more risks are classified as real assets. The aim of these investments is to achieve greater returns. Think of investments in shares and real estate.

Amounts in millions of euros

 

Eind of Q1
2022
Eind of Q4
2021
End of Q3
2021
End of Q2
2021

Investment assets

21,992 23,811 23,089 23,089

 

Due to a new pension system that will come into effect in the Netherlands within a few years, the Board of Philips Pensioenfonds has considered what this change means for the Fund's policy. We are dealing with a new reality in the short term. The Fund's policy is normally long-term. However, due to the upcoming system change, there is reason to deviate from our long-term policy on a number of points. The aim of this is to give our participants a good start in the new pension system.

Among other things, the Governing Board has decided to reduce the risk profile of our investments during the transition to a new scheme by reducing the allocation to equities by 7.5 percentage points and investing the proceeds in government bonds and cash. In addition, it was decided to change the interest rate hedge from a dynamic hedge to an interest rate hedge of 50% of the actual pension liabilities.

Therefore, the distribution of the investment portfolio is temporarely as follows: 67.5% of the assets are invested in fixed-income securities and 32.5% of the assets are invested in commercial securities. The chart below shows how the pension fund’s investment assets are spread across the various asset classes. Fixed-income asset classes are shown in purple and orange, while return assets are presented in blue and green.

Click here for more information about the investment policy of Philips Pensioenfonds. Would you like to know more about the recent adjustments to the investment policy and the other decisions taken by the Board with a view to the arrival of the new pension system? Click here and read the news item.

The financial position of Philips Pensioenfonds is exposed to a number of risks. For example, movements in interest rates and inflation have a major impact on the pension fund’s ability to pay its future pensions (including indexation). That is why, besides investing in fixed-income and return assets, the pension fund also purchases additional ‘protection’ to hedge some of its exposure to those risks. That additional protection against interest-rate and inflation risks is not included in the benchmark. It is important to realise that the additional protection only covers part of the risks. Scenarios are possible where realising the ambition of an indexed pension is in jeopardy. Think of scenarios with disappointing stock returns or an interest rate that becomes even more negative.
 

The table below shows the following return figures:

  • Total return net of hedging against interest-rate and inflation risks. This percentage can be compared against the corresponding benchmark.
  • Total return including hedging against interest-rate and inflation risks; no benchmark available.

 

 

Philips Pensioenfonds

Benchmark

 

 

Q1 2022
1 January - 31 March

Q1 2022
1 January - 31 March

Total return
(net of hedging for interest-rate and inflation risks)

-5.5%

-5.7%

Total return
(including hedging for interest-rate and inflation risks)

-7.0%

does not apply

 

The total return of the portfolio (including hedging interest rate and inflation risk) was -7.0% in the first quarter. As mentioned in the general developments section, interest rates rose sharply in the first quarter. Rising interest rates led to a loss on the fixed-income portfolio. Geopolitical tensions over the Russian invasion of Ukraine made equity investors cautious. Equity markets also suffered from rising interest rates. As a result, the equity portfolio showed a negative return. The real estate portfolio returned positively in the first quarter. However, the return on the portfolio of equities was so negative that on balance the portfolio of equities achieved a negative return in the first quarter. Due to the loss on both the fixed-income portfolio and the portfolio of equities, the total return was negative in the first quarter.

Comparison with benchmark

Philips Pensioenfonds assesses the investment results by comparing them with an objective benchmark (benchmark). The total return was slightly less negative than that of the benchmark in the first quarter.

Related information

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Indexation policy

We try to increase your pension every year. This is called 'indexation'. But indexation cannot be taken for granted. Do you want to know more about our indexation policy?

Go to indexation policy
Financiele positie

Responsible investments

Responsible investment means selecting investments with due observance of the environment, social issues and good corporate governance.

Go to Responsible investment