Investment policy

"Maintain SSPF’s healthy financial position through a robust investment policy"


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Significant movements occur on the financial markets, yet SSPF maintains a very solid financial position with sound investment results. Interview with Leon Verboon, Investment Analyst at Shell Pensioenbureau Nederland (SPN).

Leon: "The year 2023 was all about holding inflation at bay. A year earlier, inflation had surged significantly in Europe and America. Once again, the US Fed and the European Central Bank (ECB) intervened by raising interest rate to cool the economy and curb inflation. The ECB raised the policy rate from 2.5% to 4.5% in September 2023. A substantial increase. With good effect. As inflation in the Eurozone decreased  from 9.2% in 2022 to 2.9% in 2023 (December figures). At the same time, weakening inflation fears in the second half of the year had a positive effect on both bond and stock markets."

Uncertainty among investors

To curb inflation, the ECB raised policy rates by 2% in the first 3 quarters of 2023. Leon: "Still, there was uncertainty among investors whether this increase was effective enough to curb inflation. As a result, the market anticipated a longer period of higher policy rates and priced accordingly. This led to bond markets recording significant losses throughout the year because rising interest rates typically have a negative impact on bond valuations. This, in turn, put pressure on stock markets. As investing in bonds becomes relatively more attractive with higher interest rates."

Value increase in bonds and stock markets

Leon: "However, starting  from October 2023 onwards, the market has been gaining confidence that central banks are nearing the end of raising policy rates. Understandably, as inflation levels significantly dropped. In some cases, even more than expected. In the process, expectations around future inflation were already relatively close to the Central Banks' target. As a result, market interest rates fell significantly in November and December. This caused bonds to substantially increase in value and, partly because of the positive sentiment, stock markets showed a very strong year-end spurt. For instance, the Dutch AEX rose by almost 12% in 2023, and the broad US S&P 500 appreciated in value by almost 24% (in terms of local currency). Whereby the share returns of the S&P 500 were dominated by the so-called 'magnificent seven'. These are the tech companies Apple, Alphabet, Microsoft, Amazon, Meta, Tesla and NVIDIA. They accounted for more than half of the return on the S&P 500, thereby significantly influencing the overall performance of global shares."

“Bond values saw a significant rise, while the stock markets also commanded positive attention with a robust year-end surge”

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Investment performance in 2023

SSPF's invested assets increased from around €26.1 billion in 2022 to €27.3 billion in 2023. Over the whole of 2023, the pension fund achieved a return of 6.7%. Leon: "The pension fund puts a lot of consideration into creating a robust portfolio. The aim of this is to avoid large return fluctuations. A robust portfolio is created by well-diversified investments. This means in different asset categories, sectors, countries and a large number of companies. This is in accordance with the pension fund's investment belief that diversification of the investment portfolio improves the risk-return profile. Thus, in the return-seeking assets portfolio (40% of total invested assets), SSPF invests not only in shares but also in high yield, emerging market bonds, private equity, hedge funds and real estate."

All portfolios in the plus

Leon: "The return-seeking assets portfolio, which aims to generate returns, scored an investment return of 6.5% over 2023. In addition to this portfolio, the pension fund has 2 other sub-portfolios: the matching assets portfolio and the liquidity & investment grade assets portfolio. The former aims to (largely) hedge unnecessary balance sheet risks, such as interest rates and inflation. The latter portfolio aims to provide liquidity while pursuing a modest return. The matching assets achieved a return of €527 million and the liquidity & investment grade assets achieved a return of 5.9%. The positive result of the matching assets in particular is largely due to the interest rate development throughout 2023, which was negative over the year."

“The pension fund now hedges 60% of nominal interest rate risk and 20% of the inflation risk”

Strong financial position

The pension fund invests a lot of time and attention in creating a robust investment policy. This is reflected both in hedging unremunerated risks (such as currency risk and interest rate risk) and in building a broad diversified investment portfolio. SSPF has managed to maintain a very healthy financial position despite significant interest rate fluctuations, volatile financial markets and granting indexation. SSPF had a nominal funding ratio of 134% at the end of 2023.


Were there any major crises that the pension fund responded to in 2023? Leon: "2023 was marked by two potential crises that the pension fund was very much on top of. First, in March 2023, there was major turmoil surrounding a number of banks, including the US Silicon Valley Bank and the Swiss bank Credit Suisse. Eventually, Silicon Valley Bank went bankrupt due to a classic bank run, and Credit Suisse was taken over by UBS. The pension fund quickly assessed the risk of a systemic crisis and the pension fund's position if that should be the case. Based on these analyses, the fund decided not to take any action. In addition, the pension fund closely monitored the war between Hamas and Israel and analysed the potential impact this could have on its portfolio. In this case, too, it was decided that intervention in the portfolio was not called for", says Leon.

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About Leon Verboon

After studying Economics & Business Economics at Erasmus University Rotterdam, Leon worked for Willis Towers Watson for 9 years, which included his role as Investment Strategist. At the end of 2021, he made the move to Shell Pensioenbureau Nederland, where he is an Investment Analyst.