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.”