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PFZW, the healthcare sector scheme, lost 0.4% in 2018The pension fund attributed the outperformances to rising house prices and low vacancy rates, corporate transport infrastructure, and smaller losses than expected on credit risk sharing.It said it had only slightly adjusted its asset allocation last year, with holdings of infrastructure and insurance raised to 3.9% and 2.5%, respectively, at the expense of its stake in developed market equities and alternative equity strategies.The scheme also increased its allocation to residential mortgages to 1.1%, while reducing its exposure to credit to 2%. It added that its 9.8% allocation to alternative equity strategies had in particular underperformed, incurring a loss of 8.3%.PFZW has returned 8% on average since it was established in 1971.The healthcare scheme reported a cost reduction for pension administration of €2.80 to €62.10 per participant, but said that achieving its target of €60 would remain a challenge, as it had to invest in automation.PFZW reduced its asset management costs by 4bps to 0.45%, and lowered transaction costs by 1bps to 0.09%, thanks to a lower transaction volume for equity and commodities.PFZW has more than 1.2m active participants, almost 1.1m deferred members and almost 465,000 pensioners. At the end of last March, its funding stood at 100.9%. At 2020-end, its coverage ratio must be at least 104.3% in order to prevent pension cuts in 2021. The scheme added that it had invested more than €32bn in investments linked to the UN’s Sustainable Development Goals (SDGs) – equating to 16% of its entire assets – and had fully integrated its ESG policy across its entire investment process.Returns breakdownPFZW said that, despite its overall loss of 0.4% last year, it had achieved an outperformance of 0.44% relative to its benchmark, largely driven excess returns from property, infrastructure and credit risk sharing allocations. Dutch healthcare scheme PFZW says it is unlikely to meet its sustainability target within its current mandate, as its staff has had difficulty finding suitable investments.The €217bn scheme had said it expected to reach a total of €20bn of investments in solutions for climate change, water scarcity, healthcare and food security by 2020 – quadrupling its stake in such investments relative to 2015.However, according to its annual report for 2018, at the end of December it had invested €14bn in the four themes, with €2bn to be added next year. It said its investment teams had struggled to find assets offering sufficient returns while also meeting its strict criteria for sustainable investments.Since 2015, PFZW has reduced the carbon footprint of its investments from 339 tons to 240 tons of emitted CO2 per €1m of corporate turnover. Its target is a 50% reduction by 2020.