Norway’s KLP pension fund made a 0.3% loss on its investments overall in the third quarter, and said low interest rates and lower prices in the equity markets had taken their toll on returns in the period.
The public service pensions giant said the value-adjusted return on the common portfolio, which constitutes the bulk of KLP’s investment assets, was -0.3% for July to September and 2% for the year so far.
These figures compare with a 1.2% quarterly return and a 4.9% nine-month return reported for the same period last year.
Chief executive Sverre Thornes said: “Low growth prospects globally and in Norway are contributing to the fact interest rates remain at a historically low level.”
In addition to this, risk premiums in loans to businesses are rising because of increased loss expectations.
“So it is now particularly important to have adequate financial strength to withstand further market events,” Thornes said.
The pension fund reported that its solvency margin ratio rose to 245% at the end of September from 213% at the same point the year before.
Assets in the common portfolio grew to NOK405.6bn (€30.9bn) at the end of September from NOK364bn at the same point last year.
KLP’s total assets rose to NOK526.7bn from NOK470.3bn.
In the first nine months of the year, equities made loss of 1% for KLP, after bringing in a return of 8.6% in the same period in 2014.
The asset class made up 19.3% of the overall portfolio at the end of September, having shrunk from a 21.3% slice at the end of September the year before.
The return for short-term bonds receded to 1.7% from 5.8%, while long-term and hold-to-maturity bonds produced 3.4%, little changed from the previous January-to-September period when they returned 3.5%.
Property was the highest returning asset class in the nine-month period this year, generating 6.6%, down from 5.4%.
Lending, meanwhile, returned 2% in the first three quarters, down from 2.4% in the same period the year before.
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