DENMARK - The main part of Denmark's Pension Fund for Lawyers and Economists (JØP) posted an investment return of just 0.1% in the first three months of this year, but it still managed to beat the benchmark.

Investments in Section I of the industry-wide JØP fund, which holds assets of DKK32.66bn (€4.3bn), returned 0.1% before tax in the year to April 4 - outperforming the benchmark return of -0.1%.

Section II of the fund, which holds DKK183m and has a higher stocks weighting, returned 2.1% in the same period, against a benchmark return of 1.85%.

"Share prices and bond yields have risen again in 2007, and this has determined which of the two section investment strategies fared the best," the pension fund said in a statement on its results.

JØP's equities portfolio produced an investment return of 4.1% before tax, which was higher than that of any other asset class, it said. By comparison, long bonds returned 0.5% before tax.

"Therefore the investment strategy for Section II, whose equities weighting is 10 percentage points higher, had an advantage over the lower equities weighting of Section I," the fund said. "On top of this, there was a big loss in strategic derivatives, which fell by 45% before tax," it added.

Of the two sections, only Section I invests in strategic derivatives, the fund said, in order to protect itself from falling bond yields. The equities weighting and associated interest-rate hedging are the two points that differentiate the strategies of the two sections, it said.

Section I has 51.4% in long bonds, 26.2% in equities and 2.3% in strategic derivatives, whereas the smaller Section II has 42.6% in long bonds, 35.4% in equities and no strategic derivatives.