Europe's biggest pension investor, APG, will increase its allocation to private markets to just over 30% and sees current credit market flux as a potential buying opportunity, its chief investment officer for private investments told Reuters.
APG invests around 600 billion euros ($702.00 billion) for clients including ABP, the Netherlands' biggest pension fund. Around 26% of its assets are currently in private markets but it would add more after ongoing changes to investment rules in the Netherlands, Patrick Kanters said.
The new rules under the Future Pensions Act, introduced in phases since 2023, free Netherlands-based funds from committing to a defined retirement payout for workers and allow more risk to be taken, including reducing the money kept in lower-yielding but liquid government debt.
With people living longer and having more jobs over their lifetime, the new system gives younger workers their own pot of money which can potentially grow much more quickly.
Currently, APG has around 10% of its total assets in real estate; 5-6% in infrastructure, which would rise to 10% over time; 8% in private equity, up from 6% historically; and a sub-1% allocation to natural capital assets such as forestry.
It also has a "rather small" holding of 1.5% in private debt which could rise to between 2% and 4% over time, depending on the client. Based on its current assets, that could mean its allocation rising closer to 24 billion euros from around 9 billion euros.
Large Dutch funds are beginning to transfer clients' money to the new pots this year and all Dutch pension funds have until January 1, 2028 to complete the transition.
The move comes as the broader market faces increased volatility after several U.S. retail-focused funds were hit by a surge in redemption requests amid concerns around falling returns and the impact of AI on software firms.
"Some sub-markets are correcting, and that can indeed provide opportunities going forward," Kanters said in an interview this month. "For these types of investments, you need to have a very long investment horizon."
For APG, the focus was on investing where capital was scarce, structures were robust and underwriting discipline was strong, including in real assets and infrastructure‑related financing, Kanters said.
"Ultimately, manager quality, deal structuring, and downside protection matter more to us than making thematic sector calls."
APG's existing private debt investments cover areas including real asset credit, speciality finance, structured credit, direct lending and non-performing loans. Around 60% is in Europe against a market average allocation of around 30%.
"The U.S. remains the largest and most established private debt market globally. For a long‑term investor like us looking to build a larger and diversified portfolio, it is difficult to ignore that depth and breadth," Kanters said.
Asia also presented attractive returns and high‑quality managers, he said.
($1 = 0.8547 euros)
