Focus on Equities Enables Poland’s PKO BP Bankowy OFE to Excel

Deputy CEO Wojciech Rostworowski has turned the Polish pension fund into a stock picker, helping it thrive after a 2014 regulatory overhaul.


Many pension managers are debating whether to ramp up equities exposure because of low interest rates. Wojciech Rostworowski has no choice. Ever since the Polish government seized government bond holdings from the country’s pension funds last year, 6.9 billion-zloty ($1.8 billion) PKO BP Bankowy OFE has been forced to become almost exclusively an equity investor.

Fortunately, Rostworowski was prepared. When he took over as deputy CEO in March 2012, the 51-year-old executive decided equity research was the outfit’s key strength and focused his six-person team on stock selection. A former equity manager at the Polish mutual fund arms of MetLife and Skandinaviska Enskilda Banken, Rostworowski tells how his team covers 200 companies, roughly half domestic and half foreign. “Every day you just have to try to be better and better and cover your companies well,” he says.

Funds were required to allocate a minimum of 75 percent of their assets to equities last year; PKO holds fixed-income instruments only for liquidity purposes. “We pay little attention to corporate bonds because we think it’s an undeveloped market in Poland,” Rostworowski explains. “It’s high risk and low liquidity.” As for equities, he favors European stocks over other markets, particularly the U.S. “We feel the European market offers more upside,” he says. “There’s QE in Europe, and interest rate hikes are coming in the U.S.”

Those calls have worked out well: PKO returned 26.63 percent over the three years through the end of February, the second-best performance among Poland’s 12 pension funds. But if there’s ever been a place where past performance doesn’t guarantee future results, it’s the Polish pension business. The government is due to conduct another review of the industry in 2016, and Rostworowski fears officials may make another raid on pension funds — perhaps even shutting them down and steering everyone back into the pay-as-you-go state system. “We are doing what we are supposed to do, as well as we can,” he says. “But I am not very optimistic about the future of this particular industry.”

This profile is one of 12 written for our 2015 European Investment Management Awards, which honors some of the best investors in the business. See also profiles of Lifetime Achievement Award winner Henrik Gade Jepsen, Centrica’s Chetan Ghosh, Lancashire County Pension Fund’s Michael Jensen, ABN AMRO’s Geraldine Leegwater, Varma’s Reima Rytsölä, AP4’s Magnus Eriksson, CERN’s Elena Manola-Bonthond, ERAFP’s Philippe Desfossés, Linde’s Christoph Schlegel, Inarcassa’s Alfredo Granata and VBV’s Gunther Schiendl.