The Dutch Pension Fund for Healthcare and Welfare (PFZW) has cut the number of companies it invests in from around 3,500 to just 800 as part of a sweeping overhaul of its equity portfolio, aimed at improving long-term returns and strengthening sustainability oversight.

The move marks a significant reduction in holdings and a shift away from a passive index-tracking approach to a more selective strategy, as part of the provider's 2030 Investment Policy.

By concentrating its listed equity exposure, PFZW said it now has more control over the companies it invests in, while retaining diversification across regions and sectors.

The healthcare sector fund, one of the largest in the Netherlands, explained that holding thousands of index investments had previously left it exposed to reputational and operational risks when incidents occurred at companies that did not align with its long-term objectives.

Indeed, this follows recent research from The Centre for Research on Multinational Corporations (SOMO) that highlighted concerns over the growing influence of American asset managers in the Netherlands, raising particular questions over their influence on Dutch pension funds.

The firm’s new approach instead actively selects companies based on return, risk, and sustainability criteria, with the market index now serving as a benchmark rather than a starting point.

PFZW stressed that despite the reduction in holdings, the new portfolio maintains a risk profile comparable to the broader market.

It also highlighted a slight shift towards European and Dutch companies, in line with its aim to contribute to the energy transition and respond to wider societal changes.

The fund will publish updates to its transparency lists on a quarterly basis, outlining the companies included in the portfolio.

The listed equity strategy is one element of PFZW’s broader 2030 Investment Policy, which seeks to deliver market-based returns for participants’ pensions alongside an appropriate risk profile and “desired level of sustainability”.

PFZW has previously highlighted the positive climate impact of its investments, with investment in one Dutch company - Rift - on track to help reduce carbon emissions.

---