Danish labour market pension fund Sampension saw its overall investment return narrow and unit-link pension returns dip into the red in the first quarter, weighed down by losses on equities.
Business volumes grew strongly, however, with overall contributions up 8.5% from the same period a year earlier to stand at DKK2.1bn (€9.4bn), the fund said as it released interim results.
The total investment return for January to March 2016 fell to DKK3.8bn from DKK13.7bn in the first quarter of 2015.
The investment return before pensions tax (PAL) on unit-link (markedsrente) pensions was between -0.1% and -1.8%, down from 2.8% and 9.5% in the comparable year-earlier period.
Equities made a loss in the first quarter, while bonds delivered a small positive return.
Alternative investments produced a 2.4% return, including a return on real estate of 4%, Sampension said, adding that interest-rate hedging had finally made a profit.
Chief executive Hasse Jørgensen said: “We need to create value in the long term for our customers, and our exposure to global equities and emerging markets has recently been an advantage and led to us doing relatively well in comparison with other players.”
Exposure to Danish and European shares and weakness in the US dollar helped performance in the first quarter, he said.
On the business side, the rise in total contributions was boosted by a 55% rise in transfers-in to DKK249m in the first quarter.
Jørgensen said the rise in contributions was very positive and over the fund’s budget.
“It is down to extra contributions in company pensions, as well as the result of increases in collective bargaining agreements, which were made last year,” he said.
Total assets rose to DKK265.2bn at the end of March from DKK249.6bn at the end of December 2015.
Meanwhile, commercial mutual pensions provider AP Pension reported returns of between +0.3% and -0.5% for unit-link pensions in the first quarter, depending on age profile.
Ralf Magnussen, investment director at AP Pension, said the pension fund invested globally with an active strategy hedged against currency fluctuations.
This combination contributed to AP Pension’s first-quarter returns ranking top against its commercial competitors, he said.
“The picture was the opposite in 2015, when we were at the low end, but we stuck to the strategy,” he said.
He said this approach was paying off now as it had also done over a longer time period.