Iceland’s Almenni pension fund has reported nominall investment returns between 4.8% and 5.7% in the first half of 2023 for its various customer portfolios, although high inflation had essentially wiped out those gains in real terms, it said.

The pension fund, Iceland’s sixth-biggest, said: “After a difficult year in the markets last year, when there was a decline in all the main securities markets, the first half of this year is off to a much better start and the nominal return in all Almenni portfolios is positive in the range of 4.8% to 5.7% in the first half of 2023.”

It added: “But since inflation in Iceland was relatively high at the same time, at around 5.3%, the real return on the savings is insignificant or negative.”

Portfolios investing only in bonds and indexed deposits rose the most in the first half of the year, the Reykjavik pension fund said on its website.

There had been considerable fluctuations in the stock markets, both in Iceland and abroad, Almenni said.

“Domestic shares have fallen during the year, amounting to a decrease in the total index of the main list by 7.8% in the first six months of the year,” it continued.

“However, there has been a positive turnaround in most foreign stock markets this year, and the MSCI world stock index has risen by 15.1% in US dollars,” the pension fund said, adding that this equated to a 12.2% increase in Icelandic króna, as the króna had strengthened against the dollar during the year.

The yield on both indexed and non-indexed bonds had risen somewhat during this year, it said, which led to a decrease in their value.

The Stock Exchange’s index for five-year unindexed bonds rose by 1.4% in the first half of the year, and the comparable index for 10-year unindexed bonds rose by 4.5%, it said. The exchange’s index for 10-year index-linked bonds rose by 5.4% during the year, with the increase in the consumer price index largely explaining that change.

Expectations were that inflation in Iceland and many places abroad had peaked and would continue to decline, Almenni said, following key interest-rate increases and other developments.

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