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Dear APS participant or Pensioner,
As a member of our pension fund, you have a right to know what happens to your monthly pension contributions. At APS, we make it our top priority to make sensible investments that generate returns to pay out pensions now and in the future. Also, we find it important to keep you updated on our investment results. In this newsletter, we will highlight our local portfolio. Please find below an overview of our local investment activities in 2021.
How did we do locally in 2021?
In 2021, our local investment portfolio has grown by 4.9% since 2020.
On December 31, 2020, our local investment portfolio was worth ANG 469 million (audited), and on December 31, 2021, this number had increased to ANG 492 million (unaudited) by virtue of inflow of pension contributions, interest and lease earned on the local loans and real estate investments, new investments in local loans, and new time and call deposits during 2021.
What are our investment choices based on?
The 60/40 Rule By law, approximately 60% of our funds have to be invested locally (in Sint Maarten and/or Curaçao).
The remaining 40% must be invested internationally. We will delve into the international investments in our next newsletter.
Our Investment policy
To ensure that APS makes the best possible investment choices, APS must comply with the rules incorporated in the Master Investment Policy Statement (MIPS). The policy supports sound risk management and the generation of optimal returns. For example, APS is obligated to regularly monitor the financial condition of every local institution and company APS has invested in (at least) annually. And very importantly, the MIPS prescribes the maximum amount APS can invest in one sector or project, so we can be sure to spread our risk.
To make sure our investments generate good returns, we invest in adequately secured products with established, financially stable firms and projects. Determining if an investment is viable, is done by performing a thorough due diligence that can be described in general by the following key steps:
1 Initial Review: does the investment fit into APS’ vision and investment policy? 2 Financial Review: does the investment adhere to our risk/reward profile? 3 Legal Review: does the investment comply with our legal requirements? 4 Investment Committee Advice: a secondary review which includes an independent analysis plus advice on the investment. 5 Decision by Board.
Every investment opportunity must pass each of the above steps in the order from 1-5 before it can be included in our portfolio.
What kind of investments did we make in 2021?
Our local investments range from real estate to bonds, loans and deposits.
Real Estate
The investment category local real estate projects makes up 9.2% of our local investment portfolio. Projects are selected on the premise that they fit APS risk/return profile AND contribute to Sint Maarten’s sustainable development. Our current local real estate (development) portfolio consists of Mary's Fancy, Oryx Residences, the APS Parking Lot, and the Professional Office Park.
Bonds and corporate loans
The investments in 7 carefully selected local bonds and loans and residential mortgages for Oryx Residences comprise 37.4% of our local investment portfolio.
In order to lower risk, we diversify as much as possible. Simply put: we don’t put all of our eggs in one basket. Because if for example APS were to invest all of its funds in the tourism sector, losses in this sector, such as during the COVID-19 pandemic, would cause APS to lose a substantial amount of its investment. By spreading the investments over different sectors such as the marine, real estate development, and health sector, the loss in one sector can be compensated by the gains in another.
Deposits generating fixed returns
What we cannot invest immediately because of the limited availability of investments that are good enough for a pension fund, we place as much as possible in income-generating time and call deposits with different established local banks. This way, we can make money and, if needed, access the funds to reinvest in higher-yielding investment opportunities.
Cash on current account
Our current account now holds 5.2% of our local assets. This money is used to pay out pensions, personnel salaries, and to fund the daily operations of APS’ organization.
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