The two pension funds managed by Denmark’s LD Pensions increased their year-to-date returns during June, with the Holiday Allowance Fund (Lønmodtagernes Feriemidler) – the newer of the two – outpacing the older fund.
The Frederiksberg-based pensions firm said in a commentary that the holiday fund returned 5.5% between January and 7 July, while the Cost-of-Living Allowance Fund (Lønmodtagernes Dyrtidsmidler) had gained 4.0% for its key investment pool LD Discretionary (LD Vælger).
By comparison, returns for the two funds up to 26 May were 3.5% and 3.1%, respectively.
However, the pensions manager warned that despite a strong market currently, it saw a risk of slowing economic growth in the next six months.
Equities in particular had pulled returns higher recently, it said, with the category of global shares having produced more than double that of Danish equities.
“The increase in global shares is particularly concentrated around seven to 10 technology companies that have risen significantly in the spring of 2023,” LD Pensions said, adding that progress in artificial intelligence (AI) had been the main factor lifting prices in that sector.
“If you look at the stock market excluding these seven to 10 companies, the return in 2023 has been more moderate,” the pensions manager said.
On the economic front, LD Pensions said there was continued activity in both Europe and the US, and the US service sector in particular, but that there were also areas where activity was slowing.
“The American consumer continues to use savings built up during the Corona shutdowns. As the savings surplus is reduced, economic growth is expected to slow over the next six months,” LD commented.
In the next few months, there would continue to be much focus on central banks’ interest rate policies and on whether tighter credit terms would affect company earnings, it said.