What's new in pension portfolios: Sex shops

THREE years ago, Amsterdam's mayor asked a roomful of pension fund managers if they'd be willing to invest in the regeneration of his city's notorious red light district. Two lonely hands went up.

The same question today might have triggered a bidding war. "In the current market, everyone in that room would have raised their hands," said Boris van der Gijp, a director at pension fund adviser Syntrus Achmea Real Estate & Finance, who attended the event. "But at that moment, there were not that many parties who would even assess this kind of deal."

In an era of record low interest rates and ageing populations, the most risk averse of institutional investors are now buying assets that would have once seemed inconceivable. With much of their bread and butter - government bonds - yielding less than zero, the pursuit of a stable income has turned Europe's pension funds into anything from landlords of Dutch sex shops and British bingo halls to investors in lotteries in Gibraltar. The retirement savings for employees of the British Broadcasting Corp are helping to pay for a new sewage tunnel in London, while Pension Insurance Corporation bought Virgin Atlantic debt that's backed by landing slots at Heathrow Airport. Germany's Versicherungskammer Bayern even looked at investing in refugee shelters earlier this year.