Some institutions are bound (legally and/or contractually) to hold (a certain percentage of) their assets in government bonds. So they don't really have a choic

Some institutions are bound (legally and/or contractually) to hold (a certain percentage of) their assets in government bonds. So they don't really have a choice. Also, their performance isn't measured in absolute percentage terms, but only as relative to the benchmark - so if the benchmark goes just as negative as the fund, they didn't actually "underperform".