Ronald Wuijster from APG has spoken in support of the contribution that "innovative" investments make to pension funds' returns and diversification.
Wuijster argued that it was possible to transform alternatives into liquid assets within a relatively short period, but he stressed that the speed was dependent on the scale of the holdings.
Wuijster said hedging constructions following the financial assessment framework (FTK), such as hedging against interest risk, currency risk and inflation risk, were far greater liquidity risks. "I believe in the value of illiquid investments, as long as their allocation doesn't exceed 30 per cent of the entire investment portfolio", he said.
However, he underlined the importance of solid reporting about alternative investments, adding that their management did not necessarily require exceptional skills, just different expertise.
Wuijster warned against political pressure on pension funds to increase their investments in the local market, such as in mortgages, arguing that this would distort the market and cause "serious" problems. Wuijster attributed the current funding problems at Dutch pension funds mainly to the impact of rising longevity and "too optimistic" management decisions, such as "granting too generous pension rights and charging too low contributions".
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