PFA, Denmark’s biggest pension provider, has revealed it boosted its exposure to US equities, and US technology stocks in particular, in an early-2023 portfolio shakeup – an asset allocation shift the firm says paid off with strong first-half returns of up to 9%.

The DKK736.3bn (€98.9bn) Copenhagen-based pensions group said on its website that its medium-risk profile C market-rate pension product returned 7.6% from January to June this year.

Kasper Ahrndt Lorenzen, PFA’s group chief investment officer, said: “The first half of 2023 ended really well for returns.

“At PFA we delivered a return of up to 9%, mainly driven by the rising equity markets, and that is linked to the fact that the inflation concerns we had when we went into this year with very high inflation – and the question of whether the central bankers could get away with it – have slightly been put to shame,” he said.

Inflation was going down, central banks seemed to have more room for manoeuvre, and there were many indications that interest rates might now be at their peak, he said.

Alongside that, the CIO said in a video commentary published on Wednesday, the labour market was very strong, which helped support the stock market.

“We have a good broad portfolio at PFA, we are sticking to our investment strategy, we have masses of equities in our portfolio, including unlisted investments and other things,” he said.

Ahrndt Lorenzen said equities had been the main element of the portfolio behind the return in the first half-year, especially US equities.

“What we did at the beginning of the half-year was to reorganise the portfolio, getting more US shares, and also several US technology stocks,” he said, adding that, seen in isolation, that had been a good decision.

Things were now generally well set up for the second half of 2023, he said.

“The inflation picture is better than it was six months ago, the labour market continues to be strong, so we are of the clear opinion that we could have further rises in equity prices when we enter the second half,” said Ahrndt Lorenzen.

However, equities could not be expected to rise at the same tempo in the rest of this year as they had in the first half, he said.

“It’s easy to be worried about some things; inflation is still creeping, the geopolitical uncertainty remains, but it seems that there is now a landing strip that couldn’t quite be seen six months ago,” he said. He added that because of that, PFA was relatively positive about the second half too.

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