DENMARK - Industriens Pension, the pension fund for the industrial sector in Denmark, returned 22.4% in 2009, before taxes. The positive return is a result of a large equity and corporate bond allocation.

Industriens Pension's results are in line with other funds in Denmark, such as PensionDanmark PFA, AP Pension and PKA, some which also reported record returns for 2009.

Industriens Pension's large reserve capital enabled it to take advantage of the positive development in the equity markets in 2009. The returns mean that the fund has DKK9.7bn to add the account dividends it pays to members as well as building up reserves. At the end of 2008 Industriens Pension's reserves stood at DKK9.5bn compared to DKK 18.9bn at the end of 2009.

Jan Østergaard. CIO, said the fund has a very active investment strategy. "This means that we constantly evaluate whether the best strategy is to invest in equities or bonds. In 2009 was a very good year for us, and for the equities market."

Having large reserves enables the fund to pay members 6% in account dividends for 2010 as well as continuing its active investment strategy. Since launch in 1993, Industriens Pension has had an average annual rate of return of 8.4% after taxes, one of the highest in the Danish industry, and the average return over the past 5 year is 8.1%, again beating other pension providers such as PFA, AP Pension, Danica and Nordea.

During the past few years Industriens Pension has hedged interest rate risk so that its reserves remain intact even if interest rates fall. The hedging policy was useful during the financial crises of 2008 where long-term interest rates in Denmark fell.

In 2009 the long term interest rates increased again and the pressure on the reserves have decreased and that in 2009 the hedging policy had a negative effect on returns. The total return including interest rate hedging was 13.5% for 2009.

Industriens Pension has some 410,000 members in the industrial sector and manages assets of around DKK70bn.