Norway’s biggest provider of municipal pensions, KLP, reported a loss of 2.6% for its key common portfolio in the nine months to the end of September, with its chief executive officer saying that in the future, high interest rates would benefit pensions management.
The Oslo-based firm said its investment result for the nine-month period had been a negative NOK27.3bn (€2.7bn), and that total assets had increased by NOK14.0bn between January and September to stand at NOK720.8bn – despite a NOK6.8bn fall in the third quarter.
Sverre Thornes, KLP’s CEO, said: “The war in Ukraine, the energy crisis, increased international tensions, inflation on the up, with rising interest rates – all have produced some big movements in the financial markets.”
However, KLP had solid financial buffers, he said, which safeguarded customers’ pension capital in periods of negative market movements.
“High interest rates are good for the management of pension capital going forward,” Thornes said.
The CEO said KLP’s management approach had helped to mitigate the negative results and laid the foundation for good returns in the future.
LD says Q3 losses checked by inflation hedging, slimming equity risk
Danish pension fund manager LD reported double-digit losses for the first nine months of this year on both of the funds it runs, but said inflation hedging and reducing equity risk this summer had mitigated the negative result.
At the end of September, the year-to-date return for the balanced fund LD Discretionary (LD Vælger), which holds most of the Cost-of-Living Allowance Fund (Lønmodtagernes Dyrtidsmidler) assets, stood at 11.4%, the Frederiksberg-based firm reported.
Meanwhile the newer Holiday Allowance Fund (Lønmodtagernes Feriemidler) ended the nine months with a 10.4% loss, LD Pensions said.
Lars Mayland Nielsen, LD Pensions’ CEO, said: “We are satisfied that to some extent we have been able to avert losses for the members in an unusual year with violent movements in the financial markets.”
LD said its savers had benefited from the firm having partially hedged inflation risk, and the fact that equity risk had been reduced since the summer.
“It is difficult to predict when the markets will turn, but we believe that our investment strategy creates a good return for the members in the long term,” the CEO said.
LD Pensions said markets had been slightly more positive in October though, and that the losses on LD Discretionary and the holiday fund had shrunk slightly since the end of September to, respectively, -9.3% and -7.8% currently.