Focus of discussion: Numeric, Acadian, and Robeco named among investment management firms gaining from PGGM's investment revamp
PGGM, the investment manager for PFZW, the Dutch bros pension fund, has announced a significant overhaul of its equities strategy. This shift, worth nearly €30 billion, marks a notable change in the Dutch bros pensions landscape.
As part of the transition, PGGM has awarded new mandates to a variety of asset managers. Systematic firms, such as Numeric, Robeco, and Acadian Asset Management, will manage large portions of PGGM's equity allocation. M&G has been given a €2.5bn mandate based on its Positive Impact fund, which invests in companies like Schneider Electric, HDFC Bank, and Johnson Controls.
In addition to systematic managers, PGGM has also appointed several fundamental managers to run more concentrated portfolios built on in-depth company research. Lazard has been appointed to manage a €2.5bn bottom-up fundamental equity mandate, while UBS has been tasked with managing a €3.8bn fundamental equity mandate. Schroders has been awarded a €3.9bn equity mandate focused on stronger alignment with the Paris climate goals.
The shift towards a more concentrated portfolio has increased tracking error from 1% to 1.25%. The number of holdings in PGGM's portfolio has been reduced from around 3,500 to approximately 800 companies. This reduction in diversification is counterbalanced by the increased focus on active management, which allows for more targeted investments in companies that align with PGGM's sustainability goals.
The equities strategy overhaul also involves a renewed commitment to active management. ABP, the Netherlands' largest public sector pension fund, has announced a shift towards passive investing across its listed assets two years ago. However, PGGM's new strategy aims to give equal weight to return, risk, and sustainability, as part of PGGM's '3D' management beliefs.
PGGM's move towards active management and sustainability is indicative of a broader trend in the Dutch bros pensions industry. The Dutch bros pensions industry is currently undergoing a sweeping reform, with Defined Benefit schemes transitioning to Collective Defined Contribution arrangements by January 2028. This shift towards more active management and sustainability is likely to continue as pension funds seek to align their investments with their members' values and long-term interests.
The new mandates awarded to asset managers, such as M&G, Lazard, UBS, Schroders, Numeric, Robeco, Acadian Asset Management, and Abrdn, reflect PGGM's commitment to working with firms that share its sustainability goals. The asset manager selected by PGGM for a European mandate worth 11.5 billion euros is not explicitly named in the provided search results. However, it is noted that the Dutch pension fund PFZW, for which PGGM manages much of the assets, moved mandates away from BlackRock and LGIM, indicating a shift towards other asset managers due to sustainability strategy changes.
Robeco has been awarded multiple mandates in PGGM's restructured credit portfolio, totalling €11.68bn and €3.7bn. Abrdn has been given a €3.6bn mandate in PGGM's restructured credit portfolio, while PGIM has been awarded a €1.8bn mandate in the same portfolio.
This overhaul of PGGM's equities strategy is a significant development in the Dutch bros pensions industry. By shifting towards active management and sustainability, PGGM is setting a new standard for pension funds in the Netherlands and beyond. As more pension funds follow suit, the focus on sustainability and active management is likely to become even more pronounced in the coming years.
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