The Governing Board of Kosovo Pension Savings Trust has finished its first meeting for 2010. I this meeting, which started on January 24th and ended today, January 26th, the Board discussed several issues that are the responsibility of the Board and took several decisions about the pension savings fund.

Investments

The Governing Board in its last meeting decided to deposit €10 million, money belonging to participants’ savings, at NLB in Prishtina, a bank that has shown interest in the bidding process, and which fulfilled the conditions set forth by the tender, including the bank guarantee for KPST assets. These €10 million increase the amount invested in banks dealing in Kosova to 25 million in total that are invested in Kosova’s market.

The Board has also decided to invest another 10 million in the equity market, in indexed fund managed by Vanguard. This decision has been reached after the growing stability of global capital markets and after the satisfying performance of KPST investments in 2009. The Board has also decided to invest another 50 million in the money market, through Fortis (ex ABN AMRO).

As for the longer term investment strategy the Board has decided to direct KPST investments in 3 major categories:

•       40% of the fund will be invested in equity indexed funds, similar to the one managed by Vanguard

•       30% of the fund will be invested in investment instruments with absolute return, similar to the funds managed by Schroders and ECM, and

•       30% of the fund will be invested in financial instruments such as money markets, bank deposits, etc

By the next Board meeting which is going to be held in April, the Board will tender for asset managers for each of these categories.

The Governing Board is pleased with the investments return for 2009, which ended with a 14% positive return, making 2009 the best year ever since the KPST exists. This return has shown that financial markets are returning to normality which has increased the level of clarity of the financial markets, and enables the Governing Board to be more comfortable with investing in these markets.

The reduction of the management fee

The Governing Board welcomes the approval of KPST’s management fee by the Assembly of the Republic of Kosova. Since January 1, 2010 Trust has begun to apply a new management fee charged on assets under management, which is reduced to 0.80% from 0.90% as it was last year. Reduction of the management fee was approved by the Assembly of the Republic of Kosova in November 2009. Management fee withheld by Trust for assets under management is used to cover operational expenses of the KPST. Thanks to the increased efficiency and improved administration and management of the Trust as an institution, in 2010 the Board has decided to reduce operational costs. The biggest part of 2010 budget will be spent to cover fees charged by asset managers that invest pension savings assets. These expenses comprise 60% of the overall annual budget of the KPST.