- December 1, 2014: Vol. 8, Number 11

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Dutch fund to invest in residential mortgages instead of bonds

by Reg Clodfelter

The pension fund for Douwe Egberts, a multinational tea and coffee producer, will invest €75 million in Dutch residential mortgages and will make a corresponding reduction in its investment in government bonds in France, Germany, the Netherlands, Belgium and Austria, according to a recently-released newsletter from the pension fund.

The investment represents approximately 5 percent of the €1.5 billion pension fund’s assets, and the reduction in government bond exposure will bring the fund’s allocation to the asset class down from 32.5 percent to 27.5 percent.

The pension fund cited the low interest rate on government bonds, which it does not see changing any time soon, as the reasoning for lowering its allocation to the asset class, and also noted that the mortgages do not present much additional risk as they have strict guidelines and most have a government guarantee.

Despite the move into the asset class, the pension fund will not be issuing mortgages

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