The three labour-market pension funds administered by Denmark’s Unipension produced investment returns of between 6.1% and 6.4% in the first six months of this year, with profits on private equity and Danish shares driving returns, according to interim reports.
The pensions administrator praised its strategy of active portfolio management, saying this had resulted in DKK8bn (€1bn) more in returns over the last five years than would have been gained with passive management.
The Architect’s Pension Fund (AP) made a 6.1% return on investments before tax between January and June this year, while MP Pension, which covers academics in Denmark, produced 6.3%.
Meanwhile, the Pension Fund for Agricultural Academics and Veterinary Surgeons (PJD) returned 6.4%.
These returns compare with profits for the whole of 2013 of 8.3%, 8.3% and 8.9%, respectively.
In absolute terms, the returns to members in the first half of 2014 totalled DKK6.4bn.
Danish shares returned almost 22% in the first half, while private equity investments produced around 10%.
Bond investments generated almost 6%, it said, as a result of the historically low yields that produced good price rises on the instruments.
Commenting on the investment environment in the first half, Unipension said trouble in Ukraine and the Middle East had fomented a great deal of uncertainty on the international political scene, which spread to the financial markets.
Expectations about the full-year result were uncertain, it said, because the continued debt crisis in countries within the euro-zone meant developments in Danish, as well as international markets, were marked by great uncertainty.
The schemes’ average annual returns in the five years between 2009 and 2013 – ranging between 9% and 11% – were among the highest in the Danish pensions sector.
Unipension said: “Investments have been made using active management of the portfolio, and we have estimated that members have gained DKK8bn more in returns than they would have received if we had used passive management.”
Altogether, Unipension manages around DKK100bn in assets in the three pension funds.
Solvency levels at all three funds continue to be strong, it said.
“Because of this, we can stick to the long-term investment strategy that is the background for the good investment returns,” Unipension said.