APS has formulated a strategic investment policy that reckons with our pension liabilities. This means that we mainly invest for the long run. After all, pension spans many years.
Committee advises the board
The board drafts an investment plan each year. The board is advised by an investment committee in determining the investment policy and checking the asset managers that invest our pension capital. The Minister of Finance appoints and dismisses the members of this committee at the advice of the board. The minister also consults the Central Bank of Curacao and Sint Maarten, which supervises APS.
60% of the assets invested in the domestic market
We have a domestic (Sint Maarten and Curacao) and an international investment portfolio. We are legally obliged to invest 60% of our capital (approximately Afl. 750 million) in the domestic market. We are allowed to invest the other 40% in the international markets. The United States is our main international market.
The composition of our investment portfolio is roughly as follows:
|Fixed-interest securities, loans, term deposits||45,4%|
|Fixed-interest securities, money market funds||16%|
Stimulate local economy
With the domestic investments we stimulate the economy of Sint Maarten. The importance of this was underlined after the hurricane Irma that severely struck our island in 2017. We have then accelerated investments in existing housing projects and made investment in new projects for affordable houses of good quality. This is important for us.
Despite the investment in the reconstruction of our island, the domestic investment opportunities for a large investor such as APS are limited. We invest the money of our participants and make stringent demands of the parties and projects in which we invest. These limitations are the reason that we use a somewhat lower return objective for our domestic portfolio than for our international portfolio. We aim to obtain an average return between 3% and 6% on our domestic investments over a period of five years. For the international portfolio, this is between 7% and 11%. As a result, our long-term objective for our total investment portfolio is an average annual return of 5.5%.