DENMARK - Denmark's LD ended the first half of this year with only a slight loss for scheme members - a result that the pension fund says vindicates its decision to bring risk management back in-house this year.

Return before tax on the Danish pension fund's LD Vælger fund, which is used by more than 90% of the scheme's members, was -0.2% for the January-to-June period.

Members' total assets fell by DKK1.8bn (€242m) from the end of 2010 to DKK52.8bn at the end of June.

LD said: "In January, LD took daily risk management back into its own hands, and this decision made a positive contribution to the return in a period when share and bond markets in turn experienced unusually large price falls."

Within the LD Vælger fund, quoted shares made a loss of 3.5%, bonds returned 0.8% and private equity and property ended the period with a profit of 7.7%.

LD said that, over the six-month period, it reduced equities risk while increasing the size of its bond investments.

The overall split between shares and bonds was the main reason for the investment return for scheme members, which was good compared with other products such as balanced investment funds over the same period, it said.

In June, the fund's management opted to increase equities hedging.

LD director Dorrit Vanglo said: "It is never satisfactory to give members a loss, although 0.2% is a small loss. That said, I am very satisfied we took the decision to protect members' savings further, even though at the beginning of the year many people judged the prospects for stock markets as bright."

Investments in gilt-edged government and mortgage bonds are heavily weighted in the LD Vælger portfolio, the fund said.

LD had no investments in government bonds issued by southern European countries or Ireland, and its exposure to the financial sector in the form of corporate bonds was less than 10%, it said.

After the end of the reporting period, in July and August, high returns from the heavy weighting of bonds acted as a positive counterweight to losses on the equities side, LD said.

At the same time, both currency and stocks hedging produced a profit.

For the five and a half years up to the beginning of 2011, LD's risk management has been outsourced as part of a fiduciary management contract with the LD Invest, which was then a subsidiary.

Last year, LD's investment was outsourced via tender to a range of different asset managers.