While this figure might sound alarming at first, experts in the financial sector maintain that there is no cause for immediate concern, considering the fund’s overall performance.
Since 2005, there has been only one year of losses, amounting to “only” €421 million in 2018. The bulk of the 2022 loss can be attributed to the fund’s Variable Capital Investment Company (SICAV), which alone incurred a deficit of €3.17 billion.
Financial expert Claude Arend justified the loss, citing the unpredictability of various factors, including geopolitical developments like the Russian attack on Ukraine.
Arend stressed that the fund’s performance, given the circumstances, is commendable. He explained that the loss was mainly driven by rising interest rates, which affected the balance between bonds and shares in the fund’s portfolio.
With approximately 60% of its assets invested in bonds and 40% in shares, the fund experienced an unusual reversal, as typically bonds balance out the volatility of shares. However, Arend expressed confidence that it is “virtually impossible” for such a scenario to recur in the next decade.
Regarding shares, Arend pointed out that investments in fossil fuels achieved some of the best results.
“I don’t even want to imagine what would have happened, at least in terms of shares, if the fund had listened to organisations like Greenpeace and had completely reduced its investments in the energy sector last year,” Arend said.
Today, however, the situation on the energy market is not as advantageous anymore.
When asked, Minister of Social Security Claude Haagen explained that in the future, investments will no longer be made solely based on returns.
In February, MPs discussed a new, more sustainable investment strategy in the Chamber of Deputies. A motion, which was approved, demanded that investments must align with the goals of the Paris Climate Agreement.
