The Danish Pension Fund for Engineers (DIP) plans to grow its real estate portfolio further after the asset class generated a 12.8% return for 2018.
The result helped cushion losses in other areas, resulting in a full-year loss of 1.7% on its investment portfolio, according to its annual report.
DIP – which is one of two pension funds for engineers in Denmark – described 2018 as an eventful and challenging year for the pensions sector.
While total assets remained broadly unchanged at the end of December 2018 from the year before, at DKK41bn (€4.4bn), DIP said that over the past five years they had risen from DKK33bn in 2013.
Chairman of DIP Peter Falkenham said: “In 2018, both the spread of our investments and our risk profile were put to the test. In order to make our investment portfolio as robust as possible, we have composed it of a range of different assets, and in particular our real estate investments have helped to ensure good returns.”
Falkenham said the real estate result was achieved partly through positive market conditions but was also the fund’s efforts to develop and optimise the management of its existing property portfolio.
“At a time when global equity markets are challenged, the property market shows itself to be stable and over the next few years we expect to increase our real estate portfolio.” he said.
Real assets accounted for 16.3% of DIP’s investment portfolio at the end of 2018, up from the 14.8% allocation to the asset class a year earlier.
In January, DIP and the Lawyers’ and Economists’ Pension Fund (JØP) bought a stake in a Danish office complex from Sampension in what JØP said was the biggest commercial property deal ever done between pension funds in Denmark.
DIP said it was continuing in its talks with JØP about their plans to merge, and had asked its members to vote on the consolidation on 29 April.
The pension fund said the merger would place the resulting joint pension fund among Denmark’s top 10 largest funds and give it access to more lucrative investment opportunities.