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Danish roundup: LD, ATP, Agricultural Financing Institute, Skandia

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  • Danish roundup: LD, ATP, Agricultural Financing Institute, Skandia

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DENMARK - Investment returns at Danish pension fund LD bounced back in the first two and a half months of this year, with its main product showing a 4.3% profit.

The LD Discretionary Investments (LD Vælger) product had ended 2011 with a return of just 0.7%, giving the plan a middle ranking compared with corresponding pension products.

The fund said: "The reason the ranking is not better than this can be attributed mostly to LD's relatively high level of exposure to Danish shares.

"The Danish stock market suffered a significantly greater loss than global stock markets."

But the home market had rebounded strongly again at the beginning of 2012, it said.

"So members can now reap the benefits of LD having stuck with its Danish equity investments in 2011," it said.

More than 90% of LD's pensions assets are invested through the LD Discretionary Investments managed product, with the rest invested in self-select investment pools.

In other news, statutory pensions institution ATP has indicated it is open to considering investment in the planned Agricultural Financing Institute (LFI) announced by the government as part of its development package.

ATP's deputy director Ulrik Weuder told IPE: "The door opener is that the investment has a relevant risk reward. If so, we will evaluate the investment like all other investments to see if it fits our portfolio."

The government measures announced earlier this month are aimed at improving access to financing for small and medium-sized enterprises.

With the LFI, it has said it aims to provide financing for equipment to farming businesses with effective business leaders and new, young farmers, to re-establish the structural adjustment in the sector.

It is looking for investors to come up with a capital base of DKK300m (€33.6m) to establish the institute.

The Danish Bankers' Association (Finansrådet) has said its members, along with Nykredit Realkredit and DLR Kredit, were ready to contribute DKK125m of this.

Meanwhile, rising share prices and falling bond yields this year have allowed Skandia to trim the withdrawal penalty in force on its Danish product - Skandia Bonuspension.

The commercial pensions provider said it was cutting the penalty on the with-profits product to 0.8% from 1.9%.

Providers impose withdrawal penalties on such products when the value of underlying assets falls below the stated value of customers' pensions.

Equity markets had been mostly positive in January, marked by profit-taking in February, but positive again in March, it said.

Skandia said: "This has meant that Skandia made a profit on share holdings of over 4% since the last withdrawal penalty statement.

"On the bond side, falling yields also gave a positive return, but on a somewhat lower level than shares."

Lastly, a report by consultancy Kirstein Finans has revealed a shift within unit-link pensions asset allocation in Denmark towards alternatives and away from the more common asset types.

In its 2012 pensions report, which analyses pension products offered by both commercial and labour-market pension providers, the firm also showed that, among commercial pension providers, AP Pension produced the highest return in 2011.

Competitor TopDanmark "has been struggling", a summary of the report said.

Commercial companies had, on average, brought down their level of cost, Kirstein found.

It said: "So they have come closer to the labour-market pension funds, where the development has been generally unchanged."

The report also noted that there had been a higher degree of coordination between commercial providers in 2011, with providers incorporating new asset types and management tools.

"There is a tendency among unit-link products to use more dynamic management, gearing and overlays," the report said.

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