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High risk investment options yield 25% returns for Danish FSP

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DENMARK - Finanssektorens Pensionskasse (FSP), the DKK21bn (€2.8bn) Danish labour-pension fund for the financial industry, reported 2010 investment returns of up to 25.7% for its market-link pension products.

Of the three FSP Vælger profiles, the low-risk choice returned 13.3%, the medium-risk profile produced 16.9% and the high-risk segment yielded 25.7% last year, the pension fund said.

FSP finance director, Søren Schjødt-Hansen, said the fund was particularly pleased with the result for FSP Markedrente (market yield) in 2010.

"We can focus fully on a long-term investment horizon with FSP Markedsrente," he said. "Equities and bonds with credit risk have done well, and in conjunction with our meticulous choice of a range of the best funds, this has meant the year ended very well," he said.

The results are weaker than 2009, but still well above the five-year average. In 2009, the three risk profiles returned 15.5%, 23.2% and 35.8% respectively.

However, seen as five-year averages at the end of 2009, the returns were 4.5%, 5.8% and 6.9% respectively.

Sara Brinks Larsen, membership director at FSP, said it was positive that the many pension scheme members who had opted for the unit-link product at the start of 2010, rather than the traditional guaranteed product, were already being rewarded with a good return.

"FSP is owned by its members, and FSP Markedsrente does not pay for guarantees. So members benefit from the whole of the return," she said.

Alongside traditional equities and bonds, the unit-link product also offers investment in other asset classes as well as private equity and property, FSP said.

Last year, private equity investments produced the highest return, thanks in part to the new listing of Danish jewellery company Pandora, the pension fund said, while funds with traditional bonds produced the lowest return in 2010.

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