ABP’s Investment Beliefs: A Foundation for Long-Term Value

ABP, the Dutch civil service pension fund, manages a vast portfolio with the goal of providing secure and sustainable pensions for its participants. This ambitious objective is underpinned by a clearly defined set of investment beliefs that guide its strategic asset allocation and investment decisions.

At the core of ABP’s investment philosophy lies a strong conviction in long-term value creation. They understand that pension obligations are long-dated, demanding a patient and disciplined investment approach. This perspective allows them to weather short-term market volatility and capitalize on opportunities that may be overlooked by investors with shorter time horizons.

Risk management is paramount. ABP recognizes that achieving long-term returns requires carefully managing risk. They employ a comprehensive risk management framework that considers a wide range of factors, including market risk, credit risk, operational risk, and emerging risks like climate change. Diversification across asset classes and geographies is a key tool in mitigating risk.

ABP believes in the power of active management to generate alpha, or returns above a benchmark. While they recognize the role of passive investing, they actively seek out skilled investment managers who can identify and exploit market inefficiencies. They emphasize thorough due diligence and ongoing monitoring of their external managers to ensure alignment with their investment objectives.

Sustainable and responsible investing (SRI) is deeply integrated into ABP’s investment process. They believe that environmental, social, and governance (ESG) factors can have a material impact on long-term financial performance. They actively engage with companies to promote better ESG practices and consider excluding investments in companies that fail to meet their sustainability standards. This commitment reflects a belief that investing responsibly contributes to both financial returns and a better world.

ABP understands the importance of innovation and adaptation in a constantly evolving investment landscape. They continuously monitor global economic trends, technological advancements, and regulatory changes to identify new opportunities and risks. They invest in research and development to improve their investment processes and explore new asset classes.

A commitment to transparency and accountability is essential for building trust with their participants. ABP publicly discloses its investment policies, performance, and holdings. They actively engage with stakeholders, including pensioners, employers, and policymakers, to ensure that their investment strategy remains aligned with their needs and expectations.

In summary, ABP’s investment beliefs are anchored in a long-term perspective, rigorous risk management, active management capabilities, a commitment to sustainability, and a dedication to transparency. These principles guide their investment decisions and contribute to their ability to deliver secure and sustainable pensions for future generations.