Denmark’s Industriens Pension reported a 21.9% return on its home-turf equity holdings in the first nine months of this year and said it outperformed in the domestic market through successful stockpicking.
Reporting interim results, the DKK147bn (€19.7bn) labour-market pension fund posted an overall return for January to September of 3.8% before tax, compared with 8.2% in the same period last year.
In absolute terms, the pretax profit was DKK4.9bn, down from DKK9.4bn.
Laila Mortensen, chief executive, said: “This year our holding of Danish shares has done incredibly well once more, which proves the quality of the Danish businesses but also that we have been able to invest in the right companies at the right time.”
The 21.9% return on Danish shares was 2.2 percentage points above the average market return.
The pension fund said it had more than DKK10bn invested in the domestic equities market.
Mortensen said July to September had been a challenging quarter and that the pension fund’s non-listed investments had provided a good, stable return in an otherwise falling market.
He said equity markets the world over had been hit in the third quarter by nervousness due to speculation on interest-rate rises in the US, Greece’s debt problems, stagnation in China and a correction following a long bull market.
“When the markets change direction, diversification and risk coverage are really important,” Mortensen said, “and in this case non-listed investments have had increasing significance, as interest rates have come down so far.”
Non-listed investments, which constitute DKK29.5bn of the pension fund’s DKK133.5bn investment portfolio, generated a return of 4.2% in the third quarter alone and 13% in the first nine months of the year.
Mortensen said Industriens had been building up a solid portfolio of unlisted investments over many years.
“In a period such as the one we have been through, when quoted investments have been under pressure, the value this type of asset gives is clear to see,” she said.
However, foreign shares, which account for DKK29bn of the portfolio, lost 0.8% between January and September, and the most heavily weighted asset type – corporate bonds, which account for DKK30.3bn of the portfolio – made a 1.8% loss in the period.
Nominal Gilt-edged bonds made a 0.4% profit, and index-linked Gilts returned 0.9%.