New paths for a high performer
“Excellent returns for 2023 for a fund that now has 40 years of history,” judge’s comment
WINNER
Country |
Portugal |
Founded |
1984 |
Type |
Defined contribution |
Members |
13,626 active |
AUM |
€1,261m |
Performance |
14.96% (1yr) |
Fundo de Pensões do Grupo EDP (EDP) is a closed defined benefit pension fund. Ageas Pensões manages one of its four balanced multi-asset portfolios, together with the direct property and strategic assets portfolios. In 2023, the fund returned 14.96% and has delivered an average annual return of 4.48% over the past ten years.
EDP is managed under a transparent framework where governance, financial targets and sustainable goals are assessed and reviewed regularly. In 2023 the investment strategy was revised, based on a new ALM adequacy study that aims to align the strategy more with the liabilities, shorten the duration gap with the protection of the current available surplus and prevent a possible fall in interest rates from causing financing deficits.
EDP follows a responsible investing policy, consisting of three main planks:
- Positive screening: Increasing the allocation to sustainable investments, with a target allocation of 5% by the end of 2025
- Negative screening: Exclusions for fossil fuels, alcohol, controversial and civilian weapons, and other areas
- Engagement: A policy of intensifying engagement with investee companies, with regular monitoring of voting activity, ownership and stewardship
EDP aims to achieve net zero greenhouse gas emissions across its portfolio by 2040. It reports regularly on a range of climate-related metrics and will be setting a series of five-year interim targets to achieve certain levels of decarbonisation, using 2022 as a baseline.
Since it started investing in private equity in 2007, EDP has played an important role in developing the local industry, investing in 28 Portuguese private equity and venture capital funds, with committed capital of around €100m. It selects best-in-class Portuguese managers, maintaining a diversified portfolio both at manager, strategy and sector level. Its annual average IRR since inception has been 5.1% and it considers its investments to have outstanding potential for future exits.
STRATEGIC TAKEAWAYS
➤ Revision of investment strategy to further protect fund solvency against falling interest rates |
➤ Responsible investing policy, based on positive and negative screening, and engagement |
➤ Average internal rate of return for private equity portfolio of 5.1% |
HIGHLY COMMENDED
Country |
Portugal |
AUM |
€1,026m |
Performance |
7.40% (1yr) |
FP Banco Santander Totta is a defined benefit fund, where long-duration assets form most of the portfolio. Strategic decisions have been key. During 2023, equities became a slight alpha detractor due to the underweight allocation and hedging costs, and non-liquid assets also generated negative alpha. But this was offset by the positive contribution of the overweight duration in fixed income, leading to a net return of 7.4%.
Country |
Portugal |
AUM |
€155m |
Performance |
11.42% (1yr) |
BPI Vida e Pensões manages a family of open-ended pension funds covering different risk profiles. BPI Aberto Ações is the third largest fund, with €154.6m in assets. Created in 2005, it is targeted at investors under 40 years old and with a higher risk tolerance, and its investment profile is the most aggressive of the open-ended funds. Its circa 50% globally diversified equity exposure is acquired mainly through passive investment funds.
Judged by
Gianmaria Fragassi
Neill Hamilton
Bart Heenk
Alejandro Olivera