DENMARK - A large allocation to domestic equities helped boost the first quarter results from ATP Group, which reported a 2.9%, return on its investment portfolio.
ATP's overall profit in the first quarter was DKK10.5bn (€1.41bn), as the group's hedging portfolio of long-dated bonds and interest rate swaps added to the result with a return of DKK2.3bn, due to the widening spread between domestic and European long-dated swap rates.
The group's investment portfolio is split into an alpha and beta section, with the DKK364.2bn beta portfolio invested in five 'risk classes' - equities, interest rates, credit, inflation and commodities - and the DKK5.3bn in the alpha portfolio actively invested.
In the first quarter, the beta portfolio produced a return of 2.7%, driven by a 10.2% return on equities, a 3.6% return on credit and 2.8% from interest rates. The absolute return from the inflation and commodities portfolios was also positive, producing a profit of DKK100m.
Within the equities portfolio ATP noted that domestic equities produced a return of 10.8%, as biotech investments performed particularly well, while private equity and foreign equities produced equally strong returns of 9.3% and 10% respectively.
Lars Rohde, chief executive of ATP, said: "Q1 results are highly satisfactory. Our large allocation of domestic equities performed outstandingly well, boosting returns by DKK3bn. Once again, domestic equities outperformed equities in both Europe and the USA."
Meanwhile, the positive performance in the credit portfolio was attributed to a 4.7% return on high yield bonds as credit spreads narrowed, while loans to credit institutions and funds also returned 2.5% in the first quarter.
ATP, which runs the Danish supplementary labour market pension scheme and the Special Pension Savings scheme (SP), manages around DKK661bn in assets and the first quarter performance allowed it to increase its reserves by DKK10.5bn to DKK75.4bn.
However, the group revealed 92% of the total number of SP account holders managed by the group have withdrawn their savings because of the Danish government's Spring Package announced last year that allowed special access to the savings.
Between 1 July 2009 and 31 March 2010, ATP disbursed savings of around DKK43bn to 2.7 million individuals, equivalent to 92% of account holders. This left ATP with 239,000 remaining account holders with savings of approximately DKK1.2bn. However, from May 2010 any remaining SP savings will be automatically disbursed, and from October any unclaimed money will be transferred to ATP for management until the end of the limitation period, at which point ATP will be able to use it for its bonus potential.
In the quarterly financial report, ATP noted that the continued economic recovery was accompanied by "rising concerns over public finances in a number of countries". Despite this, ATP said it expected to meet its performance target of a DKK10.2bn return for the 12 months ending December 2010, based on the Q1 results and "economic developments in the first few months of the year".