Financial Markets

Financial Markets

Trump. China. Brexit. Coronavirus. These are all developments with an impact on the financial markets - and on our pensions. But what is the extent of that impact? How do financial booms and setbacks affect us? And what do short-term developments mean for the long term? Keep reading here for more about financial markets.

Long-term investment
Collection Contents
16 Publications

APG invests in the Chilean transmission market

Published on: 31 March 2021

APG and the Chilean company Celeo Redes, S.L.U. – or briefly Celeo – signed a shared purchase agreement to acquire 100% of the transmission line business of Colbún Transmisión, S.A. With this agreement both APG and Celeo increase their presence in the transmission market in Chile doubling their portfolio and strengthen their position as one of the Chilean leading transmission players.


Colbún Transmisión S.A. consists of 29 operational transmission line assets totaling 899 km and 27 transmission substations located across Chile. The portfolio accounts for c. 5% of the total transmission market in Chile. Through this acquisition, APG and Celeo will become the second largest player in the regulated Chilean transmission market.


APG will acquire an 80% stake in the company on behalf of its pension fund clients ABP and PPF APG, with Celeo acquiring the remaining 20%. The transaction is subject to the approval of the relevant antitrust authorities. The closing of the transaction is expected to take place in the second half of 2021.


Ron Boots, Head of Infrastructure Europe at APG: “We are pleased with today’s agreement and acquiring such a strong foothold in the Chilean transmission market through the acquisition of Colbún Transmisión together with Celeo. We are always looking for solid, stable infrastructure investments because they help us to realize profitable and long-term returns for our pension fund clients and their participants.”


Watch this CNN news item: 

Volgende publicatie:
Are you afraid of ghosts?

Are you afraid of ghosts?

Published on: 18 March 2021

No one likes to have a monster under the bed. And even if your parents say there is no such thing as a ghost, as a child that’s not what it feels like. In the financial market, there is also a monster lurking sometimes. One that has the capacity to scare the living daylights out of everyone: the inflation ghost. How afraid of that should we really be?


The bad news: this ghost is real. In western countries there have been three periods of massive inflation in the last century. In the Netherlands, this amounted to an average of about 10% during both world wars. In the seventies, it was 7% a year. At that rate, your money is only worth half of what it was after ten years. That means the same pension will only get you through half of the month.


The damage can already start before the monster even stirs. Because it is the fear of inflation that can cause interest rates to rise before even one price tag has been received. Because inflation makes government bonds with fixed remuneration in Euros less attractive. If scared investors then dump these items, the price goes down and interest goes up. And a higher interest rate also has a negative effect on shares and housing prices. It makes future profits and renting worth less. And home buyers will also not be able to borrow as much.


Financial markets take rising inflation into account. This can be seen in the increasing price of insurance for inflation. Why? Rising optimism about economic recovery due to vaccines and fiscal injections plays a role. Inflation is higher in an economy that is growing. But more expensive raw materials and logistical problems can lead to higher prices. A shortage of chips affects production costs, a shortage of containers in the right place drives up transportation costs.

High inflation is not the most likely scenario, but it would be unwise not to take it into account.

Still, these types of problems should be temporary. Rising prices for specific products and services are what solves logistical problems – greater supply of containers where they are most needed - trigger higher production. The current production problems are certainly not economy-wide. For the time being, the world is still far below its old production level. Therefore, overheating – a spiral of rising wages and prices – is still far away. Also consider that the inflation rate has been (too) low for years, despite the substantial money offer from the ECB.


So, can we rest easy? No, not quite. High inflation is not the most likely scenario, but it would be unwise not to take it into account. In the somewhat longer term, it is conceivable that supply will be constrained while demand rises. Trade restrictions, climate damage, strict regulations, and cost-prohibitive taxes are examples of barriers on the production side. Additional demand can come from hefty public investment programs backed by generous monetary policy. Several scenarios are conceivable. To mention one: a late, abrupt energy transition that converges with physical climate damage.


Should you encounter the inflation specter in a nightmare, go with it for a while. Think through the consequences if such a scenario occurs. Imagining a risk scenario helps you to make better decisions the next day. As a result, you will be able to sleep a lot more soundly the following night.


Charles Kalshoven is a macro-economist and senior strategist at APG

Volgende publicatie:
Chief economist Thijs Knaap at BNR on Shell, dividends and China politics Biden

Chief economist Thijs Knaap at BNR on Shell, dividends and China politics Biden

Published on: 25 February 2021

“There is not one template for all energy companies to follow. A dogmatic approach to 'more renewable energy at any price' is not the solution.” says APG's Thijs Knaap in the Business program on BNR Nieuwsradio in response to news that Shell failed to meet its climate targets last year. “We will continue to discuss the energy transition and climate policy with Shell, and how Shell is making concrete arrangements for achieving climate neutrality. And we will continue to follow Shell closely and critically on the path to energy transition.”


Knaap, chief economist at APG, regularly joins the Zakendoen investor panel. In today's broadcast, he also discusses China's desire for President Biden to cut trade tariffs. “In policy there is sometimes a gap between idea and implementation. Trump's idea of ​​seeing China as an adversary was sensible in some way, but the implementation was chaotic and yielded little. Biden has largely the same idea, but a different implementation.”, He says in conversation with presenter Thomas van Zijl and panel member Martine Hafkamp.

Lower dividends are also discussed. Knaap: “No problem. It is no surprise that it was a bad year and that little profit was made. Much more important: survive the year and then just continue paying dividends. ”


Listen to the entire broadcast (Dutch) here. 

Volgende publicatie:
APG is expanding investments in high-quality student accommodation

APG is expanding investments in high-quality student accommodation

Published on: 22 February 2021

After a successful start in Australia, APG has further expanded its investment in Scape student accommodation on behalf of its pension fund clients. To this end, Scape and APG have set up a £ 500 million (€ 580 million) joint venture for the United Kingdom.


Scape develops and manages student accommodation with a high standard in city centers. The residents have access to high-quality facilities such as fitness rooms, study rooms, stylish furniture, wireless music systems, weekly cleaning, food delivery, et cetera. With these accommodations, Scape is responding to favorable long-term demand due to increasing international student mobility and growing domestic demand.


For APG and ABP, this step in the British market offers very attractive investment opportunities with a stable return in the long term.

Volgende publicatie:
The alliance between the free market and democracy

The alliance between the free market and democracy

Published on: 18 February 2021

In a time of increasing global protests and with the Dutch elections just around the corner, I like to look at the ‘alliance’ between the free market and the democratic rule of law.

The economists Acemoglu and Robinson discuss the economic and political institutions in their book Why Nations Fail. Those institutions can be inclusive - everyone is allowed to participate - or exploitative. In the latter case, an elite group is draining the rest in terms of prosperity or control. One of their thoughts is that economic freedom and political freedom mutually reinforce one another. My question: is it still a happy marriage?


Why would political and economic freedom actually go hand in hand? A part of the story is (in)equality. In a rather unequal society, rulers have to implement weightier resources in order to defend their property. Economic freedom is threatening, as it also entails more competition. And before you know it, political freedom leads to reallocation. If a country (nevertheless) develops, a middle class arises that wants participation and tries to enforce certain rights. Their success, if achieved, is also beneficial to the economy. Entrepreneurs in a democratic rule of law, have to be less concerned about someone else benefitting from their investments.

And that's how we continued to have a clear world until the end of the Cold War. You either lived in a democratic nation with a free market - and at the same time a wealthy country - or you were restricted in both your economic and political opportunities and you would be poor.


The major deviation from this delightfully clear picture is China. We all know that the economic rise is unprecedented. But political freedom is not particularly part of the success formula. The Dutch republic showed success in the seventeenth century - much to the dismay of surrounding monarchies - thanks to the combination of economic and political freedoms. In turn, the Chinese show the world that a lack of freedom doesn't have to stand in the way of wealth. That's an example of which you hope it will not be replicated on a large scale.


Yet, the question is whether or not the success has a continuing status. Migration from rural areas to the city - an important growth engine - will come to a standstill someday. And there's also another reason to doubt the durability of the Chinese model. Acemoglu and Robinson state that the combination of authoritarian leadership and economic freedom is far from stable. It can go two ways. It is possible that increasing prosperity leads to increasing participation. That means it will become a free market democracy. But it is also possible to slip into unfreedom on both fronts.


Even the stable alliance between democracy and the free market can be undermined. Growing inequality can feed social dissatisfaction. And the free market can generate a lot of fake news. That has been an important factor for the storming of the Capitol on January 6th. There is no economic law determining that the most objective communication sells best.

We can therefore not just expect that everything will turn out for the best once you have economic and political freedom. That's a good thing to remember in this period of election. The election programs - but also society - pay much more attention to inequality these days. That also helps in keeping the free market and the democracy together. You ask me if I have an appropriate voting recommendation when election day has arrived? Absolutely. Make sure to vote!



Charles Kalshoven is senior strategist at APG

Volgende publicatie:
The pros and cons of short selling

The pros and cons of short selling

Published on: 8 February 2021

Private investors got together recently via the social network Reddit to take action against short selling: speculation on the decline in the price of stocks or other securities. This has been going on for centuries, but is it still fit in with our modern times? Investment expert Patrick Bronger of APG takes stock.


A bridge in 17th century Amsterdam: a group of men (women were not allowed to trade in shares) has gathered around Isaac le Maire, a wealthy merchant and cofounder of the Vereenigde Oostindische Compagnie, or VOC (United East Indian Company), the first multinational in the world and the first company that issues shares. Le Maire has been thrown out of the VOC after a fight and is looking for vengeance and a way to feed his 22 (!) children.


Short selling avant la lettre

On that bridge, Le Maire sells VOC shares to the people present, where the price is determined through bargaining. (The stock exchange doesn’t exist yet. That is still a few years away.) This concerns so-called term contracts: Le Maire must deliver the shares at a later time against the price that has been agreed upon. If the price decreases in the meantime, he will make a profit. Short selling avant la lettre. That is allowed. But what does Le Maire? He talks down the price by spreading false rumors, for instance, that a VOC ship supposedly has sunk off the coast of Cape Good Hope. And that is not allowed. The price of the VOC shares indeed starts to go down.


Reddit rebellion

Fast forward to the 21rst century. At the end of January, private investors massively buy shares of GameStop, an American retail chain for video games, encouraged by internet forum Reddit. The price on the stock exchange increases very rapidly, causing the short-sellers – who just had bet on a decrease in the price of the poorly running company – to lose billions of dollars. That was exactly what the Reddit followers wanted to accomplish: they manipulated the share market to make a fist against the in their eyes reprehensible big business: hedge funds that supposedly enriched themselves improperly with their speculation on falling prices.  

Are the Reddit rebels right or does short selling also have advantages on the share market? How much does the pension participant notice? And: what is short selling exactly anyway? We asked Patrick Bronger, Expert Portfolio Manager Hedge Funds & Alternative Alpha with APG Asset Management. Here follows his explanation.


A lesson in short selling

Short sellers actually do exactly the same that Le Maire did, but then on a large scale. They speculate that the price of shares (or bonds, or raw materials, such as gold and silver) will fall. Why? “Because they think that those shares are valued too high on the stock exchange”, says Bronger. “If the company performs worse in reality, the price of the share will go down at a certain time. Short sellers take an advance on that.” Hedge funds also participate in short selling to cover the risk of investments with which they speculate that the price will increase (‘going long’). “If that jump in price does not happen, then at least they earn from the short shares.”


How exactly does that work?

Short-sellers borrow securities – for instance, shares – against compensation from brokers, pension funds, or insurers. “By the way, APG does not lend shares or other securities in principle”, Bronger emphasizes.  Then the short-sellers directly sell the borrowed shares at the rate that is then current at the stock exchange to another investor. He can lend the shares again to another short seller. This way the same shares can be used to take a short position. Compare it with e-tickets for a music concert: you can sell them as many times as you like. But those tickets allow entrance for only one person; with short selling, the shares can be used more times by different parties.   

At an agreed-upon time the short sellers buy back the shares again to return them to the party they borrowed them from, Bronger explains: “If the price has gone down in the meantime, they pay a lower price and they make a profit. But if the price has gone up in the meantime, they have to pay a higher price and they suffer a loss.”


Is there an ‘emergency stop’?

The profits, but also the losses can be enormous, like the loss of billions by the hedge funds with the Game Stop shares shows. When the losses become too large, the hedge funds sometimes use a kind of emergency stop, the kill switch, Bronger says: “They are going to buy many shares rapidly, in an effort to compensate for their loss in the short positions or to keep it as small as possible. However, often the time pressure is big, and more parties start buying at the same time, which drives up the price of shares enormously.” That is called a short squeeze. In the case of Game Stop the brokers – including the Dutch ones – shut down the trade-in shares to prevent high peaks.


Do the criticasters have a point?

The Reddit action is a reflection of the social inequality in the (American) society and exposes the dissatisfaction and anger about that. The Corona crisis plays a part in that too: people have a lot of savings and spend much time at home. Now that shopping for fun is no longer possible, some people start trading for fun. Apart from that, a part of the criticism of the Redditt-ers is rightfully so, says Bronger. According to him, it is also important to not tar all short sellers with the same brush and to separate the wheat from the chaff.

The chaff, that’s the modern-day Isaac le Maires. “In the 21st century, there are also short-sellers who spread false rumors and via social media that can be done a lot faster than on a bridge or in a coffee house”, Bronger laughs. However, now the involved companies can refute such rumors just as fast via Twitter, while back then it only appeared after 18 months or so that such a ship had sunk or that it had returned with a rich cargo.

On top of that, some short sellers take an aggressive stance toward the management of companies that they have their eye on. Another point of criticism is that short sellers make money on companies that already have a hard time and that push those companies into the abyss even faster. Speculation on a falling price then becomes a kind of self-fulfilling prophecy. On top of that, the market for short selling is opaque because of the loaning between themselves and the reselling of shares.


Are there also arguments in favor of short selling?

Yes, there certainly are, says Bronger. For that we have to look at the wheat: those are the short-sellers who thoroughly investigate companies. “That way they can signal differences between the valuation at the stock exchange and the true performance of a company at an early stage and even detect fraud or other abuses.”

Bronger takes the example of the American energy concern Enron, which collapsed in 2001 because of a bookkeeping scandal: “Nobody realized that the top people at Enron conducted business transactions with their own company, except for an analyst of their bank. Enron demanded that the bank would fire the critical analyst, after which he went to a short seller and announced the affair to the world.” The same goes for the Lehman Brothers: the bankruptcy of the business bank marked the beginning of the credit crisis in 2008. Three months earlier a hedge fund manager had already sounded the alarm about the weak financial position of the bank and irregularities in the bookkeeping. A recent example is the payment company Wirecard, for years the crown jewel of the German tech companies. The German overseer announced a ban on short-selling with Wirecard, until the so-called ‘rumors’ about irregularities with numbers turned out to be true. An enormous bookkeeping scandal was exposed, and the company went bankrupt.

So, short-sellers do have a function, poses Bronger: they can ensure that the price at the stock exchange forms a better reflection of the true value of securities and at the same time sound the alarm in a timely manner for problems with companies that are listed at the stock exchange. “And that is valuable information for investors, both professionals and private.”


Does APG participate in short selling?

APG invests a small part of the invested capital in hedge funds, which sometimes invest that via short selling. “If APG chooses for hedge funds, then we solely do that because of their knowledge and experience in specialized investments”, Bronger explains. In total it concerns about 22 billion Euros. That seems like a lot of money, but relative to the total capital of 573 billion Euros it is not even 4%. Bronger: “That fits in our policy to invest in different categories, to spread the risk as well as possible that way. Besides, we do not participate in short selling with the pension money that our teams invest themselves. So, in principle, APG does not lend shares to short-sellers.”   

To make sure, after the publicity around Reddit and Game Stop a stress test was performed, but it barely concerned APG in the investment portfolio. “We again considered the ethical aspects of short selling”, Bronger shares. “After all, APG is a long-term investor who wants to take a responsible position. But short selling can possibly help with that too.”

The valuable expertise and information of hedge funds can increase the return on the investment portfolio and decrease the risks because bad performances and problems with companies are shown early. On top of that, short-sellers sometimes denounce undesirable behavior: how companies are being managed, or how they treat their people and the environment. “As a large investor, APG can address those issues with those companies”, according to Bronger.

APG does want to handle short-selling responsibly. That means that the pension investors don’t build up enormous short positions but, as said before, spread investing. There is also a critical eye on partnerships: not with activist hedge funds with a short term focus and not with short sellers who spread misleading market information. So, not with the Le Maires of this world. “Our own investment teams keep a close eye on the social media for new Reddit-rallies, to be able to deal with that quickly”, says Bronger.  


1.5 million lost in 30 years

What actually happened with Isaac le Maire? The VOC persuaded the government to announce a partial ban on short selling, after which the price went up. Le Maire and his companions supposedly lost an amount with today’s value of about ten to twenty million dollars. Isaac died in 1624, approximately 65 years old. On his headstone is written ‘that in 30 years’ time, he lost more than 15 00000 guilders’, or about one and a half million.


The information about Isaac le Maire is based on an interview on the American radio station Planet Money with Lodewijk Petram, historicist, economist, and author of the book De bakermat van de beurs. (Thecradle of the stock market)     

Volgende publicatie:
“Focusing on your financial affairs should be as regular a routine as your six-monthly dentist appointment”

“Focusing on your financial affairs should be as regular a routine as your six-monthly dentist appointment”

Published on: 28 January 2021

If people want to make better financial choices, they need to get a grip on their financial affairs earlier and more often, say Paulien van Gurp and Henk-Jan Boersma from Prikkl. APG took a 40 per cent interest in the financial coaching and advice platform today. Both share the same mission of removing the barriers to financial insight. Sounds great, but a bit abstract. How do you do that exactly?


It’s one of the goals that APG sets itself: making people in the Netherlands ‘financially fitter’. In other words, helping people get a good grip on their financial affairs so they can make informed choices. APG has been achieving this by developing various initiatives and tools to support APG affiliated pension fund employers and participants. The partnership with Prikkl is the most recent addition to this armory. Prikkl has been helping companies ensure their employees financial ‘agility’ since 2017, via a combination of software and personal advice. Chris Veerkamp is involved in the partnership as business owner from AGP: “We share the conviction that every person in the Netherlands is entitled to accessible and affordable financial coaching. And we want to encourage people to use this.”


Where does this “urge to encourage” come from? Don’t people simply seek advice if they need it?

 “That’s exactly the point. The barrier is too high for many people. It’s too expensive, or too much work, the result being that they often seek financial help too late. If you only seek help when it’s become a real emergency, the options are very limited. People only talk to the bank if they’re actually going to buy a house and only start investigating early retirement if they don’t feel like working anymore and state retirement age is approaching. But they’d be much better off thinking about this when they’re forty, when they can still do something about it,” replies Boersma.


Veerkamp adds: “And ‘doing something’ means making choices. The introduction of the new pension system is making these choices even more important. It will make pension levels less certain and people will need to know the potential impact of their choices in time. Buying a house, early retirement... How will these affect your finances and income now and later?”


And Prikkl and APG will be helping with this?

“Of course, that’s the aim. We want to make sure that we can offer services to pension participants at the moment that their finances play an important role; give them the right information at the right time. This means offering quick support that’s tailored to people’s circumstances instead immediately coming up with a complete financial plan. We want to help people make financial choices in their lives or careers; preferably before these choices come up,” says Veerkamp.


Isn’t it difficult to anticipate these choices?

 “Of course, and that’s where the challenge lies,” says Veerkamp. “On the other hand, as APG we know from experience which problems can arise, which choices people will make, and what impact these can have on their pensions. Through our funds, we have a lot of contact with clients every day. This means we hear what’s important to people and employers, including with respect to finances. We should be able to use this more so that we can facilitate and help people.”


“And a lot of behavior can be predicted. It’s something you can anticipate,” replies Boersma. “A good example is first-time buyers on the housing market. All they hear about is how low their chances of buying a house are. That may make them abandon the idea. When a first-time buyer starts working for an employer, we can chat to them while the contract’s being drawn up. We can then make a quick calculation of their potential maximum mortgage so they can see whether they’re likely to be eligible to buy a home. This gives people the chance to consider options they wouldn’t normally have thought of.”


Van Gurp continues: “That’s also the core of our approach. We first look at someone’s financial situation and use this to decide which solution or approach is appropriate.”


Do you only focus on employees and employers?

 “In principle, yes,” answers Van Gurp. “The employer is an important and reliable link in helping employees with their financial affairs and encouraging them to take action. We don’t target self-employed persons and freelancers, although we do of course help people who are considering starting for themselves. Who knows? Perhaps we’ll focus on the self-employed and freelancers in the future.”


APG also offers other services aimed at financial fitness, such as Kandoor and Geldvinder. What do Prikkl’s services add to this?

Veerkamp adds: “The services we offer as a ‘trusted guide’ for employers and employees are still very application and platform-driven; they’re largely only online tools. Prikkl combines advice software with personal support from a financial advisor. Moreover, Prikkl focuses on financial coaching and advice across the board – not just on pensions. We can also learn a lot from this. Partnerships with parties outside of APG mean that we don’t need to do everything ourselves to be a trusted guide for employers and participants. It is, however, important that these services enhance each other. They should be a sum of their parts.”


What are the next steps in the partnership?

“We’re going in two directions. We’re investigating how we can make optimum use of Prikkl’s current service for employers and employees of APG's affiliated pension funds. And we’ll also be investigating the development of two new propositions in the coming months. These are new ways to combine Prikkl’s knowledge and services with what we do at APG,” says Veerkamp.


When will you be satisfied?

 “When we can really ensure that improved financial insight is accessible to a large audience,” says Van Gurp. “And when we manage to reach people earlier on a large scale. We can then help them before they get into financial difficulties or before their choices become limited. As far as finances are concerned, I want to prevent that someone thinks, if only I’d....”

Boersma adds: “I’d be happy if people start seeking help with their financial affairs as a matter of course. It doesn’t need to be something you enjoy, but it should be just as regular a routine as a dentist appointment. Just go and see them once or twice a year. And we’ll be there, ready and willing to help.”

Volgende publicatie:
“Enterprising investment is the name of the game”

“Enterprising investment is the name of the game”

Published on: 22 October 2020

As a long-term investor, how do you deal with the short-term developments in a rapidly changing world, resulting from Covid-19? How do you not get distracted by the issues of the day? Enterprising investment in real assets is the name of the game, says APG’s Ronald Wuijster, executive board member, responsible for Asset Management. This means direct investments, without intervention from financial markets. Wuijster spoke about this during the World Pension Summit, which is happening from October 19 to 23.  


An institutional investor like APG invests for the long term. That makes sense, because the financial obligations of a pension fund last well into the future. The advantage of this is that you have time to allow an investment to fully mature, if necessary. The returns do not have to be withdrawn from one day to the next. However, that does not mean that you can just ignore all short-term developments, especially if these are extreme developments, such as we are currently experiencing with Covid-19.


Big dent

Whether it concerns government bonds, shares, real estate or private equity, today’s expected returns have all fallen by about 2-3%, as compared to 2012. Wuijster: “That may sound like a modest decline, but over a period of several years, it signifies a considerable dent in invested assets. If you look at the causes of that decrease in returns in the past few years, roughly four factors emerge. Low productivity growth in companies and an increase in government, company and household debts. Those are the first two. In addition, during the past five years, the central banks have also pursued a monetary policy by rapidly buying government debt – to stimulate the economy. And the increasingly intensive search for investment that will still generate some returns, has also put further pressure on returns.”

Please note: this was the situation up until March of 2020. The outbreak of the Corona pandemic had a further accelerating effect on all four of these trends. In other words, the expected investment returns further declined, because of it.

Masks and medications

At the same time, Covid-19 is accompanied by several trends that you can take advantage of as an institutional investor, according to Wuijster. “The tendency of authorities to act with decisiveness and intervention is greater than the fear of getting into debt. This creates opportunities to invest with those authorities in projects that are aimed at softening the crisis. In addition, face-to-face meetings have rapidly decreased, which has a significant impact on retail, the office market and travel behavior. And that, in turn, provides interesting opportunities for investing in infrastructure, but also requires a re-orientation within the real estate portfolio: does it fit in optimally with these developments? What we are also seeing is that a development is occurring where particularly crucial production – masks, medications – are being ‘brought home’ again. That development, incidentally, had already started before Covid-19; the long value chains between, for example, China and Europe are seen as too vulnerable. As long as things go according to plan, it seems to work fine, but if just one little thing in the chain goes wrong, the consequences are huge.”


Another trend Ronald draws attention to is the boost that working remotely got from Corona. Because, once people are used to working that way, how small is the step to offshoring? Does that legal analysis really need to be done in Amsterdam, or can it also be done in Delhi? Services are becoming marketable at a furious pace, which may lead to a new globalization wave, Wuijster predicts.

The Corona age therefore brings its own investment opportunities with it, but it is also clear that as an investor, you seriously need to take into consideration the threat of a lurking financial crisis. 


The door remains closed

In a world in which safe assets with sufficient returns are really no longer available, “enterprising investment” is the name of the game for an institutional investor. These are direct investments, without the involvement of financial markets. And that is exactly why there are advantages for a big investor like APG. Wuijster: “Due to the scope of the invested assets and knowledge of local markets, there is access to such real assets, while the door remains closed to parties that don’t have the same large scale. That scope is also required for being able to monitor those direct investments, which is, of course, a much more labor- and knowledge-intensive process than investing in the stock market.”


Finger in the pie

These kinds of investments in real assets offer the opportunity to have a significant finger in the proverbial pie. Those strong governance rights are really essential for the further development of our real assets investment portfolio, as far as we are concerned. In addition, partnerships play an important role as does cost efficiency in the investment process. We must also be able to influence the sustainability and governance factors that are relevant for a specific investment,” Wuijster states.   

Volgende publicatie:
Will corona lead to a financial crisis this time?

Will corona lead to a financial crisis this time?

Published on: 18 August 2020

Senior Strategist Thijs Knaap on the economic impact of a second corona wave


As more and more signs are emerging of a wave of the corona virus, the key question for investors is: how heavy will the blow for the economy be this time? And what will be the impact on financial markets? Thijs Knaap, Senior Strategist at APG Asset Management, reveals his vision: “From current prices, it looks like investors in the MSCI World Index think that corporate profits will be back at the pre-crash level within two years’ time.” 


As an investor your mind is constantly occupied with the question to what extent  information is reflected in the price of a certain investment category or index. Given the global economic impact of the corona pandemic, it only seems logical that Thijs Knaap is pretty occupied with the question: What will be the economic consequences of a second corona wave?


To what extent do equity markets already reflect the economic consequences of a second wave?

Knaap: “Everyone of course has different models and projections, but the current consensus is that the companies in the MSCI World Index will be making approximately thirty percent less profit this year as a result of the first wave of infections. But then again, the price of a share is also determined by profit expectations beyond 2021. Based on all of those expectations together, investors in the MSCI World appear to assume that corporate profits will be back at the pre-crash level within two years’ time.”


That is rather quick.

“Yes, but don’t forget that relatively few companies had to file for bankruptcy and that we are not in a financial crisis at the moment. And that has everything to do with the monetary and fiscal policy of national governments. Central banks are really stimulating the economy, with the result  that credit is cheap. That is the monetary part. In addition, there are many government regulations in place that enable companies to continue salary payments, such as the NOW-arrangement in the Netherlands. This fiscal policy has also contributed to the survival of many companies.”


How sustainable is that policy?

“Well, that is indeed the question. Should a second wave of infections emerge, then expected profits will further decrease in the short term. That is not pleasant, but two years of decreasing corporate profits is manageable. More important is the question of whether that second wave will be leading to a financial crisis or a wave of bankruptcies this time around. That will depend on the response of governments. They could continue the monetary policy for a while, but fiscal policy is quite a different story. The upcoming elections in the United States may lead to a Senate and House of Representatives with different political colors which means a second round of support measures could prove to be difficult - and don’t forget that the first round of support measures was already very difficult to establish. In Europe, considerable efforts were needed to reach a deal  (about the EU budget up to and including 2027 and a corona fund, ed.), but that meant spending most of the available political capital. Debt ratios (debts as a percentage of the gross domestic product, ed.) are already increasing considerably, reducing the margin for governments to maintain a fiscal stimulus. And that margin is definitely smaller in emerging countries. Anyway, the stock and bond markets are not ready for a second similar wave of infections that will indeed lead to a financial crisis or wave of bankruptcies.”  


This means the markets are not yet taking this into account?

“No, the markets appear to assume that the second economic blow will be less severe than the first one. That is not unreasonable. We know a lot more about the spread of COVID-19. Complete lockdowns are becoming less likely. More differentiated, restricted lockdowns will be implemented. The economic damage of those lockdowns is smaller, and a vaccine is being developed as we speak. There are fewer uncertainties which means the economic consequences of a second wave will be considerably less.”


Could we still get an unpleasant surprise?

“Yes, winter is coming during which the virus could spread much faster because people are spending more time indoors. And also the long-term effects of the virus on people’s health appear to be significant, but most of those consequences remain unknown for now.”

Volgende publicatie:
APG moves towards full ownership of VIA Outlets

APG moves towards full ownership of VIA Outlets

Published on: 6 August 2020

Also participates in the rights issue of Hammerson


APG has reached an agreement with the UK listed real estate company Hammerson to acquire substantially all of Hammerson's remaining interest in VIA Outlets (includes Batavia Stad). The purchase is still subject to approval by Hammerson's shareholders, as well as approval by the relevant competition authorities. In addition, APG has declared it will participate in the Hammerson rights issue announced today.


VIA Outlets operates eleven Premium Outlets in nine European countries with more than 267,000 m2 of floor space and more than 1,130 stores. In the Netherlands it operates Batavia Stad. VIA Outlets is one of the leading Premium Outlet operators in Europe, with the third largest portfolio in Europe. As of June 30, 2020, the market value of the VIA portfolio was approximately € 1.55 billion. APG is expected to pay around € 301 million for Hammerson's interest, equivalent to an 18.7% discount compared to the market value of the assets.

APG has a 19.6% interest in Hammerson and has declared its willingness to participate pro rata in the rights issue. This is expected to amount to € 120 million for APG. The Disposal to APG is conditional on the Rights Issue proceeding, and is expected to complete in Q4 2020

With the sale of the stake in VIA Outlets and the rights issue, Hammerson expects to strengthen its capital structure and thereby gain a better starting position to execute on the refined strategy.


Robert-Jan Foortse, Head of European Property Investments at APG:

‘The international retail sector has been under pressure for some time due to structural changes in the sector that are now also exacerbated by the COVID-19 crisis. This also had an impact on Hammerson's portfolio and valuation. We support Hammerson's financial and strategic measures as announced today and therefore we have decided to support Hammerson in a holistic package of a pro-rata participation in the Hammerson rights issue in combination with the acquisition by APG of substantially all of the stake Hammerson owns in VIA Outlets. With the latter transaction we move towards full ownership of VIA Outlets. We believe that Premium Outlets in strategic locations are increasingly popular with modern consumers. They are an important part of the omni-channel distribution strategy of leading brands. Premium Outlets constitute a material part of our European real estate portfolio.’


Hammerson press release

Volgende publicatie:
“We are also looking at the opportunities this crisis offers”

“We are also looking at the opportunities this crisis offers”

Published on: 2 July 2020

APG belongs to the top three biggest investors in real estate and the top six in infrastructure, worldwide. How is APG using their influence during this crisis? “The world has not changed. But I am seeing an acceleration of the megatrends that have been going on for some time.”


This is his second economic crisis at APG already, and just like ten years ago, he wants to make the best use of this crisis. During the first one, Patrick Kanters (51), managing director Global Real Assets at APG Asset Management, was still focused on finding smarter ways of organizing the 49 billion Euros invested in real estate and infrastructure, which he is responsible for. At that time, this was ten percent of the investment portfolio, a portion that continued to rise steadily, at the expense of shares and bonds. During this new crisis, he can look outward more; at the new world that is already emerging.


But, wait a minute. This is not happening that fast. This crisis is very different from the crisis back then. Wasn’t it primarily the banks that were having a problem at that time? And wasn’t “Main Street” affected only years after “Wall Street” was? This time, Main Street got hit right away; this is the street that Patrick and his investments teams travel on. It is a street made of brick and mortar, or rather, asphalt. The visible world, which has been hit hard. There are eighty employees, located in Amsterdam, New York and Hong Kong, who are experiencing the impact every day. Stores that have stopped paying rent, less profit from toll roads, in dozens of countries. The first thing this requires is what Patrick describes as “defensive measures”. Before he can look for opportunities in a world hit by the crisis, the existing investment must be supported where necessary.


Right of veto

Intervention was not easy in that previous crisis. The investments primarily consisted of relatively small interests in real estate funds at that time. And with just a few percent, APG was powerless to take a stand. So, that had to change. “We scaled back the number of funds. Instead, we took bigger interests in fewer projects,” Patrick says. “We also invest more solidly now, i.e. less risky, with less borrowed money. In real estate, the proportion of outside capital was initially over fifty percent, and currently that is less than thirty. A third measure we took was that we started to invest less in the relatively crisis-sensitive office market and more in homes, distribution centers and hotels. Now that the retail and hotel sectors are being hit hard, it is good that we are investing more directly. It makes a difference in fees, which we used to have to pay to fund managers, but in also sometimes laborious negotiations. This time, we have influence.”


About eighty percent of all real estate and infrastructure has been invested directly by APG by now. “As an investor with a minor fund interest, you have to conform to the fund’s policy. The fund determines how the investment is handled. Now we are also involved in that decision-making. Because we don’t only own bricks and mortar (asphalt), but we also make important strategic decisions. When issues come up during this crisis, we can look over the manager’s shoulder. We hear about what is going on first-hand, and then can we shift gears together faster. For example, we are currently having to deal with stores and hotels that are having liquidation problems. Are they justified in exacting discounts or withholding rent? For the hotel chain CitizenM, besides management, we are only dealing with a big co-investor from Singapore. We often figure things out faster together, partially because they are a like-minded partner that we chose ourselves. Our interests often agree. Of course, it does take time to assess the situation. But, because you have the same long-term horizon as the other party, you can take measures to protect your interest more quickly.


Closer to the business

Since the beginning of the Covid-19 crisis, teams have been gaining extra insight into the debt position of the investments, but also into the business strategies, the potential opportunities. Some fifty people are in constant consultation with managers, assisted by a growing army of highly advanced digital researchers and analysts who edit and interpret data.  “Do we need to reserve capital? Are there any megatrends we should take advantage of right away? Can we capitalize on price discrepancies?”  Of course, we don’t want to throw good money after bad. Besides looking at defensive measures, we are therefore also looking at the opportunities this crisis offers in terms of offensive measures.”


 “The teams are much closer to the business now; they have to initiate and negotiate investments, take action and be involved in making decision. This is requiring something different from them than before. For example, they must be able to serve on the company’s board or be part of the investment committee – this may be required for close collaboration with the other parties involved.”


Trends accelerate

What are the forecasts for airports once the pandemic is over? For traveling, for tourism? “The world hasn’t changed. But I see the pre-existing megatrends accelerating. For example, the need for material things had already slowed down before the crisis. Consumers are increasingly focusing on experiences. That will continue. The vigorous growth of the middle class in Asia has not disappeared. But I don’t see the number of intercontinental flights returning to the old level anytime soon. I think further growth in tourism will be mainly regional.”


Online shopping is another unstoppable megatrend. “That has gone way up and I don’t see that ever coming down. Stores that were already struggling will fold sooner. That means that we are investing more in datacenters, distribution centers, homes and highly distinctive outlet centers.”

Volgende publicatie:
Pension funds are also not immune to Covid-19

Pension funds are also not immune to Covid-19

Published on: 25 June 2020

APG experts on


Not only many professional groups are affected financially by the corona crisis, also the pension funds. This is why.


Charles Kalshoven has a background in economy, scenarios and investing. As a senior investment strategist at APG he advises pension funds on their investment policy


You probably had the flu at some point in your life. Not nice, but eventually you recover and feel as fit as a fiddle again. It is a very different story when it comes to Covid-19. The intensive care units of hospitals become overloaded and over 300,000 people worldwide have meanwhile not survived the infection with the corona virus. Imagine this being your beloved.


Many people do not realize that this pandemic can also have an impact on the pensions. Pension funds are also not ‘immune’ to Covid-19. To prevent the disease from spreading, governments placed the economy in an artificial coma. Entire industries came to a standstill which lasted for weeks. The hospitality industry, hairdressers and dentists were not allowed to open their doors. The automotive and kitchen showrooms attracted only little attention. Consumers have the tendency to postpone large purchases in times of uncertainty. Only supermarkets and DIY stores went through golden times.


The economic consequences are unprecedented, even worse than during the credit crunch. That is affecting you, as an employer, entrepreneur, and pension participant. Let me explain this: companies witness their profits disappear and have to file for bankruptcy sooner. That causes a drop in equity rates and, with that, the assets of pension funds.


Usually, it never rains, but it pours. The interest rate also dropped due to the economic crisis. That decline also has consequences for pension funds. For every Euro of pension in the future, they now have to put more money aside. That works more or less like this in the current pension system: image you want to go on a trip around the world in 10 years' time and you need 10,000 Euro to make this happen. If you have 6,000 Euro on your savings accounts right now and the interest rate is 5 percent, you can stop putting money aside. The amount increases on its own. But when the interest rate drops, you have to deposit more funds. At an interest rate of 1 percent, you will now need 9,000 Euro instead of 6,000 Euro. That is 50% more. The numbers are different, but the principle is the same for pension funds: when the interest rate drops, the pension funds have to put more money aside for the future.


That results in a double hit: the assets decrease and the obligations increase. The coverage ratio of a pension fund is nothing more than the ratio between these two numbers. And that ratio has deteriorated significantly due to the corona crisis.


Recovery or complications


The key question here is the time it takes for the pension funds to recover. The honest answer: nobody knows. I can tell you what is needed to make a fast recovery happen: a considerably higher interest rate, a rebound of equity prices or a combination thereof.


It is not inconceivable but could only happen if not too many things go wrong in the quarters to come. The virus has to be under control to such an extent that the economy is allowed to wake up from its artificial coma quickly. Because the longer it takes, the higher the risk of complications  - think about bankruptcies and persistent unemployment. That would have an instant effect on families. A continued crisis would also deteriorate the outlook for economic growth later on. In that case. the lower equity prices and interest rate even worsens the position of pension funds.


Let me end with a hopeful note. Covid-19 is more than just a flu, but in terms of the economy it may possibly not go any further than temporary (severe) shivers. Yes, we are experiencing an economic recession, but not caused by financial excesses or a natural disaster that has wiped out our production facilities. If a vaccine or drug is developed quickly, we can resume our operations with all the lessons learned in the past few months in our back pocket. That also benefits your pension (fund).

Volgende publicatie:
"Financial sector is part of the solution in this crisis"

"Financial sector is part of the solution in this crisis"

Published on: 31 March 2020

How should boardroom members deal with the current corona crisis? And to what extent can they learn from the 2008 crisis? These questions are central to an article published today by the Financieele Dagblad.


The Dutch newspaper interviewed three directors before that. One of them is our own chairman of the board, Gerard van Olphen. Gerard, as Achmea's chief financial officer, experienced the 2008 crisis up close and is able to make a good comparison. The current crisis is more visible and tangible for everyone, he notes. And now the financial sector is not the problem, but part of the solution.


Read the full article here (Dutch)

Volgende publicatie:
APG long-term investment horizon “of huge importance”

APG long-term investment horizon “of huge importance”

Published on: 30 March 2020

APG wants to guarantee the continuity of the services we provide for the pension funds and 4.6 million participants – especially in a time where society faces a lot of uncertainty due to the developments around Covid-19. To counter the consequences of the Covid-19 spread, we have been taking various measures.


One aspect of this, is to ensure our clients’ pension administration remains robust and accurate; especially now, it is important participants receive the correct pension, on time.

But also investing pension money well and responsibly is something that “simply” continues during these difficult times. The worldwide insecurity of this moment is having a considerably negative impact on the financial markets. Interest rates are also still at a very low level. Both factors strongly impact the coverage ratio of the pension funds APG works for. That is why a significant part of our attention is currently focused even more on the investments we make for our pension fund clients.


Ronald Wuijster, APG board member responsible for Asset Management: “Recently, the first priority has been to be able to keep working: analyzing, structuring and trading on financial  markets. We are ensuring that we continue to follow well tested procedures, agreed upon with our pension fund clients: We are preserving the hedges, we continue to re-balance and we are protecting the investment portfolio. As with many companies, the majority of APG employees, including most of the investment professionals, have been working from home these past few weeks. Only when there is no other option, work is done from the office.”


Even during this difficult period, APG continues to focus on realizing a responsible long-term return. On this, Ronald Wuijster states: “We believe in diversification, in which time-diversification in particular suits us well. It’s times like these that underline the immense importance of holding on to a long-term investment horizon. After more than ten good investment years, the near future will be challenging in terms of returns. At the same time, opportunities arise as well. Opportunities we need to think about already, because every crisis leads to a number of things never being the same again. There will be dozens of new trends and we will be able to take advantage of that for our clients.”


Bleak coverage ratio outlook, but some bright spots are also visible

APG is already discussing those future scenarios with pension fund clients: “Their coverage ratio outlook is bleak right now. But at the same time, there are rays of hope. The belief in the usefulness and necessity of spreading (collective) investment risk in time is seeing a strong resurgence nationwide. Another possible scenario is – and that would be the opposite of what happened during the credit crisis – that although the interest rate has initially fallen, it will be trending upwards for years to come, thanks to the financing needs of governments, which will probably lead to higher coverage ratios.”

Volgende publicatie:
Institutional investors: Companies should ease corona impact

Institutional investors: Companies should ease corona impact

Published on: 27 March 2020

In a joint statement , APG and other institutional investors urge companies to take what steps they can to mitigate the social impact of the corona crisis. The investors state that the health and safety of employees is the number one priority. However, companies should also try to prevent workers, suppliers and customers from being faced with insurmountable financial challenges.


The 195 investors – representing € 4.700 billion USD in assets under management – recognize that the corona crisis and the (near) shutdown of public life have huge impact all over the world. “Millions of working people are affected as the virus shuts down schools, employment and transportation. We know that vulnerable communities are the most strained, as they have limited access to social safety nets and financial resources to weather this uncertain periode”, according to the statement.


Paid leave

The statement asks companies to take responsibility and do their part to contribute to the protection of workers and other stakeholders. Specifically, they call upon companies to make emergency paid leave available to all employees, including temporary and flex workers. This will allow them to stay at home while retaining an income. In company locations that are still operational, measures should be taken to protect workers as much as possible, such as remote work and rotating shifts.


Retaining the workforce

While health and safety are the top priorities, companies should also acknowledge the financial impact of the crisis on employees, suppliers and customers. The investors ask companies to make every possible effort to retain workers, as widespread unemployment will only worsen the crisis. Retaining an experienced and well-trained workforce will also allow companies to resume operations quickly once the crisis is resolved. In addition, the investors encourage companies to ensure timely payment to suppliers and to work with customers facing financial challenges.

The investors emphasize it is crucial that companies demonstrate financial prudence. This may include the suspension of share buybacks and limiting executive and senior management compensation.


Volgende publicatie:
"APG direct investments in real assets reduce investment costs"

"APG direct investments in real assets reduce investment costs"

Published on: 31 January 2020

Hotels, rental properties, wind farms, airports, parking garages; APG has invested a lot in 2019 in Real Assets (tangible investments) as they call it at Asset Management. Patrick Kanters, Managing Director Global Real Assets, expects this trend to continue in 2020. He also hopes to gain more foothold in the Netherlands.


Based on the many reports, the share of Real Assets in APG's portfolio seems to be growing. Is that correct?

“Yes, it is. Our largest customer, ABP, strives for a growth of 2 percentage points of the total Real Assets portfolio; 1 percent for real estate and 1 percent for infrastructure. In addition, an expansion of the Natural Resources portfolio is pursued through investments in forestry and agricultural lands. That seems quite modest at first glance, yet we’re talking about approximately 10 billion in total expressed in money. We witness a market trend of increasing investments in Real Assets. The share of direct investments has been growing at APG since 2010 as compared to investments in funds.”


What is it that makes these types of direct investments so attractive?

“First of all, we are able to save significantly on costs. When investing in funds, a lot of money is charged for fund management. And besides that, direct investments provide more control over the type of investment we make. Does it fit within the return and risk profile we envisage? Does the investment meet our investment beliefs? It also provides us with an opportunity to have a greater say in strategic decisions. How much borrowed capital will be allocated to underlying investments, what sustainability requirements do we impose?”


How high is the return on Real Assets?

“The return on real estate and infrastructure has been more than 9 percent on average in the past 15 years.  This in combination with the diversifying role against stocks and bonds ensures for it to be an attractive investment. Of course, we notice it has been getting increasingly easier to acquire borrowed capital for investments in real estate and infrastructure, due to the current low interest rate. As a result, the prices, in addition to a strong demand for higher returns, have risen sharply. Expectations for the future are therefore more moderate and the situation may arise in which returns on investment we estimated no longer counterbalance our required returns.”


What are the risks of this investment category?

“In real estate, for example, we have to consider the economic risk of vacant buildings. When it comes to infrastructure, the fees of toll roads and the number of passing moves of drivers may influence the return. But within infrastructure we also receive income that is less depending on the economy, such as fixed fees for maintenance and provision of infrastructure. In addition, we often conclude long-term regulated contracts with governments and semi-governments. Those parties are often very reliable.”


What other criteria does a Real Asset have to meet for it to become interesting for APG?

“An investment, first of all, must have a sufficient volume. To give an idea, we focus on interests in real estate and infrastructure with a minimum of around 200 million Euro. Should an investment opportunity come along with less volume, we have to be convinced the investment can be scaled-up in the near future. CitizenM is a good example of such investment. We have partly built that hotel chain from the ground up into a large platform. The governance of a company is also important. Do we, as an investor, get a vote to block, for instance, the addition of new real estate objects and greater use of borrowed capital? Sustainability also is an important criterion. Every investment has to participate in the so-called annual GRESB-survey (sustainability benchmark for Real Assets). It will have two to three years to perform above average in terms of sustainability.” 


So, the scale of APG works to your advantage in this case.

“Absolutely. We belong to the three largest asset owners worldwide within real estate. We are meanwhile part of the top 6 for infrastructure. That scale provides us with the opportunity, as said, to influence the strategy. In addition, our scale allows us to develop new markets and to improve innovative investments.”


What type of markets are you talking about?

“Take the rental properties in England. Eight years ago, a professionally operating rental housing market barely existed. We have approached some parties there and co-established platforms that started to specialize in this real estate segment. That’s how we gained a foothold in that region. Another example are outlet centers, large shopping malls selling the brand collection of last season with substantial discounts. That’s a growing market attracting many tourists as visitors. However, it’s not a real estate category that just falls into your lap as an investor. Thanks to our scale, long-term focus and reputation, we gained access to the best specialized parties. Without our scale and accumulated expertise, we would never have been able to invest in this category.”


Besides the role of investor, you also fulfil the role of developer?

“The role of our teams at Asset Management has indeed changed significantly in the past years. Where the focus previously was on the stones (the location and quality of the building itself), it becomes increasingly important what actually happens to those stones. Do the activities taking place within a certain type of real estate align with a certain trend or market need? How does the management distinguish itself? In which way could smart technology contribute? Those questions are becoming more and more relevant. The intangible value of Real Assets is making an increasingly large mark on the return.”


Does that also require a different role for your team?

“Yes, it does. More entrepreneurial, closer to the business, being able to make more rapid decisions. More is required from us, but, at the same time, the work has also become more interesting. Fortunately, there’s room to hire new people. We will recruit 8 employees at infrastructure and 5 employees at real estate this year.”


Don’t these additional personnel costs have a serious effect on the return?

“When you look at the overall picture, it is actually more cost-effective. It is way cheaper than spending money on a fund manager. On balance, we have noticed a major decrease in the investment costs of our customers.”


What are your expectations for 2020; what are the interesting sectors for APG?

“Renewables such as wind and solar parks continue to be interesting in relation to infrastructure. However, the sharp increase in prices could possibly change that somewhat. We furthermore consider telecom an interesting sector because of the growth in data traffic. The growing electrification, in cars for example, also makes us consider electricity networks as an interesting investment. In real estate, distribution halls are interesting because of the growth in e-commerce and we continue to focus on the development of rental properties and student residences.


In the past year, APG has mainly made infrastructure investments abroad. Is the Dutch market not interesting enough?

“On the contrary. We would be happy to invest more in the Netherlands. What is difficult in the Netherlands, however, is that much infrastructure is fully owned by the government. When Eneco was offered for sale, we considered taking a stake, but eventually decided not to. Through the energy transition fund ANET we will invest in relatively small and innovative companies committed to the transition to sustainable energy. We also see opportunities to gain a foothold in the Netherlands in other sectors, such as telecom and wind farms.”