PensionDanmark made a near-10% return on investments for its younger scheme members last year, with profits driven in particular by gains on infrastructure and listed equities.
The labour-market pension fund, which caters largely for Denmark’s blue-collar workers, reported a DKK16.6bn (€2.2bn) overall pre-tax investment return, up from DKK13bn the year before.
Torben Möger Pedersen, PensionDanmark’s chief executive, said: “Shares benefited particularly well from the year’s positive development in the global economy.”
While listed equities had produced the highest return of the year, investments in unlisted shares, property and infrastructure had also contributed to driving the total return higher, he said.
“The year’s return on infrastructure of almost 13% is partly due to the nice return from the funds managed by Copenhagen Infrastructure Partners (CIP), which handles most of PensionDanmark’s investments in renewable energy,” he said.
CIP – set up by senior executives from Dong Energy in partnership with PensionDanmark – celebrated its fifth anniversary earlier this month. It is currently raising money for its third infrastructure fund.
PensionDanmark made a 9.9% return for 2017 on investments for members aged less than 41, and 6.9% for those aged 65.
This compares to 7.1% and 7.3% respectively in the previous year. The strongest performer among PensionDanmark’s asset classes was listed equity, which returned 13% over the year, or DKK8.9bn in absolute terms.
Corporate bonds and loans returned 5.2% and Danish government bonds and mortgage bonds made a 3.3% return for the pension fund.
In other asset classes – categorised by the pension fund as “non-market orientated investments” – infrastructure produced a 12.8% return last year, or DKK2.5bn in absolute terms.
Real estate, meanwhile, generated 9.5% and private equity produced 10%, or DKK621m.
Infrastructure and renewables make up around 10% of PensionDanmark’s investment portfolio, according to figures for the end of June 2017, while real estate accounts for a 7% slice.
No new figure was given for total assets, but the pension fund managed DKK224.1bn at the end of June 2017.