DENMARK - Danica Pension has announced strong returns for the first half of 2009, boosted by its holdings of high quality credit and mortgage bonds.

The fund's unit-linked Danica Balance and Danica Link products averaged returns of 7.5% and 10.3% respectively. Danica Traditionel, the fund's third product which offers a guarantee-based return, earned investors 2.6% after a change in provisions.

Jens Dalskov, chief investment officer, Danica Pension, says that for the first half of 2009, credit bonds returned 14%, compared with 8% for listed equities.
"For the first six months, we got a better return in credit bond markets than in equity markets," he says. "Spreads had moved up on a large scale during 2008, and there was a very dramatic  rewinding during the first half of this year, when prices moved back to more normal levels."

Fund portfolios are very globally diversified in equities, with a small bias towards Danish stocks, which have done very well compared with other equity markets.

Dalskov says: "Some individual companies suffered in 2008, but recovered quickly and have performed well in 2009."

He says the Danish economy has also helped boost returns.
"It is diversified in terms of exports and domestic demand, and is not dependent on one particular sector," he says. "It may not be as dynamic as, say, Sweden or Ireland, but neither is it as cyclical or volatile. There is also a fairly large public sector."

The positive trend continued into July, says Dalskov.
"During the month we saw a very solid equity market and a continuation of the narrowing of credit spreads," he says. "We had good returns for Danica Balance and Danica Link."

But he warns: "Equities have had a good rally, coming back to fairer prices, while credit spreads are at lower levels. So from
now on, it may be a bit more difficult to get returns."