Danish pension fund ATP reported a 6.7% first half return for its geared investment portfolio, with an increasing weighting to listed equities driving the gain after continued efforts by the statutory pensions giant to reduce the exposure to illiquid private assets.
Martin Præstegaard, ATP’s chief executive officer, said: “I am satisfied with the half-year result achieved in a period of incredibly large fluctuations in the markets.”
“A positive half-year result is always a good thing as it contributes to creating value for our members,” he said, but added that it was the long-term perspective that was important to ATP.
The pension fund said the positive result during the period helped significantly increase the bonus capacity to 19.7%, which bolstered the possibility of increasing scheme members’ guaranteed retirement benefits.
The half-year return indicates a strong rebound in returns in the second quarter following the 0.8% loss ATP reported for the investment portfolio for the first quarter.
Nearly all of the DKK7.5bn (€1bn) investment gain for the first half came from listed foreign equities, which produced a DKK6.0bn return, with most other asset classes ending in positive territory to a lesser extent.
ATP said its listed equities had outperformed the MSCI World index in the six-month period, partly due to the pension fund’s currency hedging practices.
“As a general rule, ATP hedges currency risks including dollars, and in recent years this has generated losses,” it said in the report.
“A positive half-year result is always a good thing as it contributes to creating value for our members”
Martin Præstegaard, ATP’s CEO
“However, in H1 of 2025, when the US dollar weakened notably against the Danish krone, the fact that ATP hedges its currency exposure in US dollars made a positive contribution,” it added.
ATP stated it had reduced the risk level of its overall illiquid portfolio in the first half, in line with the investment strategy, adding: “This brings the distribution between liquid and illiquid risk in ATP’s portfolios closer to the objective.”
ATP suffered steep losses in 2022 on its return-seeking investment portfolio, which consists of the guaranteed-scheme’s bonus potential and is leveraged by borrowing from the much larger bond-based hedging portfolio.
The dire result led to a heavier weighting in the portfolio to illiquid assets, such as private equity, infrastructure and real estate, which ATP’s leadership has said it wanted to reduce.
According to ATP’s interim report published today, listed Danish and foreign equities made up 33% of the DKK114.5bn investment portfolio at the end of June, up from 29% at the end of last year, and 20% at the end of 2023.
Meanwhile, the exposure to unlisted equities sank to 11% at the end of June from 18% at the end of 2023, and real estate fell to 11% of the portfolio compared to 15% at the end of 2023. Infrastructure, however, rose to 14% of the portfolio by the end of June from 12% at the end of last year, and 13% at the end of 2023.
The investment portfolio’s leverage has also been brought down to 216% at the end of June, from 250% at the end of 2023.
ATP’s total assets fell to DKK698bn by the end of June, from DKK718bn at the end of 2024, as the value of guaranteed pensions – and the hedging required to back them – shrank to DKK540bn from DKK569bn.
Read the digital edition of IPE’s latest magazine
No comments yet