Denmark’s Industriens Pension reported a 66.1% return on its private equity investments for 2021, an asset type that makes up 14.4% of its portfolio, and said its overall return was 16.8% or DKK33.6bn (€4.5bn).
In an announcement today, the pension fund for industrial-sector workers said listed shares had also performed well in 2021, but government and investment-grade bonds ended with losses, figures showed.
Laila Mortensen, chief executive officer of Industriens Pension, said: “Despite coronavirus lockdowns and rising inflation, 2021 has been a fantastic investment year on many fronts.”
Unlisted equities in particular, in which the pension fund invested via funds, had delivered a very high return, she said, adding that the listed equities market and infrastructure funds had generated “attractive” returns.
“Apart from this, we also made a really good profit on our inflation hedging in 2021,” Mortensen said.
Looking ahead, she said all investors would probably have to prepare for returns to be lower and for markets to fluctuate more in the next few years than they had been used to.
However, pensions were long term savings, she said, and Industriens Pension was well equipped in the long term with investments spread across many asset classes.
Industriens Pension said that over the past 10 years, it had generated an average annual return of 8.5% across all age groups.
Figures released by the pension fund showed it made a 20.3% return on Danish listed shares while foreign equities returned 18.4%, with these asset classes carrying 7.8% and 24.3% weightings in the firm’s portfolio respectively.
Investment-grade bonds, which had a 3.8% weighing, made a loss of 2.2%, with real estate and infrastructure generating returns of 5.6% and 13.1%, respectively. The latter two asset classes have portfolio weightings of 4.7% and 8.3%, respectively.
This time last year, Industriens Pension reported a 5.1% return for 2020, with listed equities contributing to the total with a 14.3% gain, but unlisted assets failing to perform as well due to the effects of the COVID-19 pandemic.