Danish pension fund MP Pension gave a tentative prediction that its full-year investment return will come in at below 10%, as it reported an investment loss of 10.1% for the first three months of 2020 – a preliminary figure it described as reasonable in a challenging market.
Anders Schelde, MP Pension’s chief investment officer, said: “One should beware of making predictions in times like these, but my best guess is that we will make a single-digit negative return in 2020, which will be followed by a positive return in 2021.”
That would be an acceptable result from a long-term perspective, he said, adding that it should be remembered that 2019 produced a high return of almost 15%.
“We are confident about the long-term risk level in the portfolio, and when we look back on this crisis in a few years, it will probably be a blip on the course graph like all previous crises,” Schelde said.
Jens Munch Holst, chief executive officer of the pension fund – which covers upper secondary school teachers and psychologists – said of the fund’s Q1 result: “It’s never nice to see the value of our members’ savings fall, but -10.1% is a reasonable result, which we can be satisfied with in a challenging market where, for example, global equities dropped 20% over the quarter.”
The Copenhagen-based pension fund said it was well prepared for such difficult circumstances, with good risk diversification in its portfolio to generate stable long-term returns, but that in a crisis like the current one, it could be difficult to find shelter from the storm.
Looking at how the coronavirus pandemic could further impact markets, Schelde said another concern was the possibility of a second wave of infection emerging as restrictions on movement began to ease.
“It requires a wide range of innovative measures, but it is not an impossible task,” he said.
Last week Schelde said he saw light at the end of the tunnel for the crisis-hit financial markets, but warned it could take several months to reach it.