FSP sees 4.3% return in turbulent times
DENMARK - Investments at Denmark's Finanssektorens Pensionskasse (FSP) produced a return of 3.3% last year, after providing for benefit payment guarantees, as commodities and equities contributed double-digit returns.
Provisional figures for the DKK23bn (€3.08bn) pension fund for financial sector employees said before providing for benefit payment guarantees, the investment return was 4.3%.
"In a turbulent year like 2007, risk diversification really shows its value," said chief financial officer Søren Schjødt-Hansen. "We achieved profits on both equities and bonds in growth markets, and at the same time we had a good return on investments in commodities."
After five years of stable progress on most stock markets, the pension fund remarked, the picture was somewhat different in 2007.
"Especially in the second half of 2007, there was a big downturn with marked falls in share prices at times, particularly in August and November," said officials.
The 3.3% return is for investment in the pension fund's traditional guaranteed-rate pension scheme.
Meanwhile, the low-risk option in FSP's unit-linked scheme for new clients - FSP WebLink - returned 3% while the medium-risk component returned 2.9% and the high-risk option produced 6.1%.
Inside the traditional scheme, equities returned 10%, with private equity contributing what the pension fund described as a "good profit". During 2007, around 30% of FSP's assets were in shares, it said.
"Commodities gave a good return of 17%, while bonds produced a more modest overall return of just under 1%," it said.
With a 15% allocation to local and overseas real estate in Denmark and abroad, this investment class had resulted in a stable and high return for several years.
In 2007, the return on real estate was 4% after adjustments for property values, the fund said, but officials noted investors elsewhere had made losses in the sector. "FSP has achieved a good return on its many quality properties in comparison with real estate companies, some of which have even had big negative returns on property," it said.
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