Iceland’s second-biggest pension fund, the Pension Fund of Commerce (Lífeyrissjóður verzlunarmanna, LV), reported that its foreign investment allocation had increased to 43% of total assets by the end of last year.

LV said in its preliminary announcement of 2020 financial results: “The fund’s portfolio is well risk diversified. Foreign securities accounted for 43% of total assets at the end of the year, compared with 40% at the end of 2019.”

This latest foreign assets allocation figure from LV is significantly larger than the 34% reached last year by Icelandic pension funds on average.

Iceland’s pension funds have been making efforts to build up their weightings of non-domestic investments for the last few years, following the easing of post-financial crisis capital controls in the North Atlantic country in 2016.

At that point, the funds’ foreign allocations stood at around 20%.

LV’s investments returned 14.7% last year, after 2019’s 18.7% gain, according to its results statement.

The last two years’ returns reported by the pension fund are well over twice its long-term average gains, at 6.2% over the last five years, 6.75% over 10 years and 4.5% over 20 years.

“LV’s operations were successful during the year and portfolio performance was good despite demanding pandemic conditions,” the pension fund said.

In January, Icelandic pension fund Frjálsi said the weakening of the domestic currency unit had increased the value of its foreign equities allocation, with the currency’s fall also having boosted investment gains on foreign assets in krona terms.

The Pension Fund of Commerce said its total assets grew by ISK145bn (€939m) during 2020 to hit ISK1.01trn at the end of last year.

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