DENMARK - ATP Group has almost recouped the losses it sustained in 2008 and reported an overall investment return of 6.6%, or DKK22.2bn (€2.98bn), in the first nine months of 2009.
The group recorded a "highly satisfactory" profit of DKK14.5bn in the first three quarters of the year, which was boosted by the bounce in equity markets and a narrowing of the yield spreads between corporate credit and government bonds.
Figures showed the combined investment and hedging activities of the ATP Pension plan - also recognised as the Danish Labour Market Supplementary Pension Scheme - resulted in a positive return of DKK19.1bn, while the investment results for the Special Pension Scheme (SP) was DKK1.3bn, or 9.5%.
The hedging activities, which are designed to protect the value of ATP's pension liabilities by using interest rate swaps and repo transactions, produced a profit of DKK4.4bn in the third quarter. It attributed this to a widening of the spread between Danish krone and euro swap rates.
Lars Rohde, chief executive of ATP, said: "Results for the first three quarters of 2009 are highly satisfactory. We have almost recovered from last year's loss and the results far exceed our goal for the full-year 2009."
ATP's investment portfolio is divided into beta and alpha sections. The DKK345bn beta portfolio invested in a range of assets that are separated into five risk classes while the alpha portfolio is actively invested.
Latest figures showed the overall return of both portfolios was DKK 22.2bn, or 6.6%, and all five of the beta risk classes posting a positive performance over the nine months. Government and mortgage bonds, which sit in the interest rate risk class, delivered the best performance in terms of Danish krone-denominated valuations as they returned DKK8.8bn, or 4.4%.
The equity risk class performed the best in percentage terms as the recent rally returned 19.1% or DKK6.1bn, and the portfolio of domestic equities returned 50.9%. The credit risk class also posted a good result of 14.4%, as high-yield bonds recorded a return of 30.5% following a narrowing of credit spreads.
The inflation-related risk class - comparing index-linked bonds, real estate and foreign infrastructure investments - also produced a positive return of 3%, or DKK1.5bn, driven primarily by the 12.2% return from index-linked bonds.
Meanwhile, the commodity risk class, which is exclusively invested in oil-related assets, returned 7.7%, or DKK500m, and the alpha portfolio recorded an overall return of DKK100m.
Rohde said: "In recent years, we have reallocated our investments to be able to weather virtually all types of economic storms. Therefore, it is rare for us to achieve positive returns on all of our risk classes, as has been the case for the period under review."
Following the positive performance, ATP revealed its reserves now total DKK61.9bn, or 17.7% of ATP's guaranteed benefits of DKK 350.8bn. However, there is the possibility that markets could fall again towards the end of the year so ATP officials the firm will keep pensions at their 2009 levels at the beginning of 2010.
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