The innovative scheme was added to MetallRente’s range of pension provision products following the German pension reform bill of 2001. Under its risk management strategy, the fund is spilt into a guaranteed portfolio (20 per cent) and a “free” portfolio (80 per cent). The strategy calculates liabilities on a daily basis, with the aim of rebalancing the fund every two weeks.
 The investment of the smaller portfolio is in the hands of Allianz Life Insurance, which guarantees to return at least the amount originally invested by allocating funds to ultra low-risk instruments, such as sovereign bonds.
 Heribert Karch, managing director of MetallRente, runs the free portfolio with advice from Heissmann Consultants. Five per cent of the free portfolio is in bond funds run by Pimco, DIT and Allianz, and the rest is in equity funds. The lion’s share of the equities are European and they are benchmarked against the Stoxx Europe index.
 The funds are managed by a range of managers – Allianz, DIT, Dresdner RCM, Nicholas Applegate and Oppenheimer – which Mr Karch aims to expand as the scheme’s assets grow. He also plans to extend the investments geographically and switch the benchmark to the MSCI World index. “Currently, as we are in a start-up situation; it would be useless to employ more than a few managers as our allocations would be so small”, he says.
 Mr Karch says he is happy with the fund’s returns so far: 7.2 per cent for 2003 and about 6 per cent for 2004.

Printer friendly version