ABP, the €201bn ($254bn) retirement scheme for Dutch civil servants – Europe's largest pension fund – will have to build a separate annex for its awards. This was the third year in a row it picked up the Financial News trophy for Europe's pension fund of the year. The fact the judges continue to rate it so highly is testament to its quest to be at the cutting edge of pension fund investment.

Roderick Munsters, new chief investment officer at ABP, is a worthy successor to the highly respected Jean Frijns. For such a large fund to impress the judges with its innovation in assets, personnel and geographical reach is no mean feat with an increasingly sophisticated peer group. ABP will shortly add an office in Hong Kong to its outpost in New York, and it becomes more like a sophisticated international fund manager each year. Most recently, it has led the pack in allocating assets to infrastructure. By the end of the year, it will have allocated 1% of its assets, amounting to €2bn, to the sector. The fund moved quickly to exploit infrastructure after deciding it had become a credible investment prospect. ABP had not initially included infrastructure in its investment plan for 2003 to 2006. Its involvement is likely to become a blueprint for other European funds which regularly call ABP to check the terms it has agreed on any deal. The fund will act solely as a financier, not an investing partner, and allocate to geographically diversified infrastructure funds. It has clear information guidelines looking at who the other fund participants are as well as their records. ABP and PGGM, the second largest pension fund in the Netherlands, have made a €500m investment in an infrastructure fund run by Dutch bank ABN Amro. The fund targets equity investments in private finance and public-private partnership projects such as schools, prisons, toll roads, airports and ports, electricity and gas transmission networks, water and sewage companies. It seems difficult to believe that the Dutch government gave ABP the freedom to look after its investments without restriction only a decade ago. Earlier this year, it announced its portfolio managers would be allowed to act like hedge funds and take short positions in equities. The move made it one of the first pension funds in the world to run its equity hedge strategies. As a mark of how influential the fund is, the European Commission called it as an observer to a new hedge fund expert sub-group, including banking groups Goldman Sachs and Barclays. Contrary to many other pension funds, ABP has also shifted asset management in-house, taking tens of billions of assets back from investment managers. In 2001, the fund had 70% of its equity portfolio invested with fund managers. Now it runs 65% of its equities internally. Emerging market equities, where the fund has quadrupled exposure in the past four years, is one of the few areas that will stay with external fund managers. Where the fund outsources assets to fund managers it does so after consulting its own database containing several hundred managers. Few pension schemes can claim to have such a resource, which puts it on a par with the best investment consultants. The fund is also at the forefront of corporate governance initiatives and has led many class action lawsuits in the US in recent years against companies it invests in where it believes the interests of shareholders have been abused. Earlier this year, Munsters announced ABP would publish a strategic investment plan by the end of the year to run from 2007 to 2009. Early indications are that it will focus predominantly on increased investment in real estate and non-listed securities. Everyone in the European pension fund world will be curious to see how ABP moves, underlining just how important the fund has become.