PC2 Investment Strategy Review for 2024


At the Board of Trustees meeting held on December 15th, 2023, the investment strategy of Pensions Caixa 2, F.P. was reviewed, and a new mandate for 2024 was approved, effective from January 1st of the current year. This new mandate has been agreed upon by the Board of Trustees, VidaCaixa, in its capacity as Management Entity, and WTW, in its capacity as investment advisor.

The main objective of the change is to adapt to the new macroeconomic paradigm following a 2023 marked by rising interest rates, declining inflation (which failed to meet central banks’ targets) and economic divergence among various international powers. There is a notable disparity, where the strength of economic activity in the US contrasts with the obstacles faced by other advanced economies, such as the Eurozone, the UK and Canada, which were on the brink of recession for most of 2023.

In terms of return and risk expectations of the updated strategy for 2024, the changes implemented seek to maintain the expected return of the strategy while reducing the risk associated with it. To this end, compared to the previous mandate, the main changes are in three categories: Euro Public Fixed Income, Reinsurance and Alternative Credit.

A greater focus will be placed on European Fixed Income, increasing exposure in both Euro Public Fixed Income (+1.0%) and Euro Private Fixed Income (+1.0%). In addition, within the Private Fixed Income portfolio, the increase in the Euro allocation is to the detriment of the non-Euro allocation. The market view to support this shift is based on rising interest rates in the Eurozone, the attractive situation of European credit spreads and the opportunity to mitigate currency risk.

The second change comes from increasing the Reinsurance exposure by +1.0%. This has been one of the best performing assets in 2023. The attractiveness of the opportunity now lies in the all-time high spreads between insurers’ premiums and their expected losses.

Finally, to finance the increases in the Euro Public Fixed Income and Reinsurance categories, it was decided to reduce the allocation to Alternative Credit. Specifically, the investment in Emerging Fixed Income was reduced (-2.0%), as, with the new macroeconomic scenario, it is an asset with greater credit risk and a less efficient risk/return ratio than Euro Public Fixed Income or Reinsurance.

In addition to the changes in the weights of each asset in the strategy, it was decided to change the benchmark in the Euro Public Fixed Income, moving to a longer duration index. The rationale behind this consensual decision is that such a change allows for greater protection in a possible recession scenario.