Denmark’s PFA Pension reported a 5.2% return for its traditional average-rate pension product for the first nine months of the year, but interim results released today also showed year-to-date investment results for its market-rate pensions remained in the red.

The DKK599bn (€80.5bn) commercial pension provider – Denmark’s largest – said that in absolute terms, its total return was DKK13.4bn in this year’s third quarter, bringing the return for first three quarters of 2020 to DKK11.6bn; following the DKK2.2bn investment loss incurred in the first half.

However, this positive return was reaped in the firm’s average-rate pensions segment, and was particularly due to profits made on the interest rate hedging which serves to protect the large bond holdings in the average-rate portfolio, according to the report.

Market-rate pensions, on the other hand, ended September with a negative total return of 0.4%, compared to a 3.4% loss reported at this year’s halfway point.

Kasper Ahrndt Lorenzen, PFA’s group CIO, said: “The returns further improved in Q3 and are around 0% for market-rate customers, while we have generated a return of 5.2%  in our average interest rate environment.”

Compared to March and April when the financial markets situation was at its worst, he said PFA had made a good comeback.

“The positive trend in the financial markets, where the losses have basically already been recovered, was very difficult to picture looking back six months,” Ahrndt Lorenzen said.

However, he added that we were still living in a very uncertain world, and so it was necessary to be cautious.

“Consequently, we constantly adjust our investment strategy and can react quickly in the changing markets,” he said.

PFA said listed equities had produced a 2.6% loss in the first three quarters of this year, with alternative investments giving a negative result of 0.6%, while the firm’s real estate and bond portfolios produced positive results of 0.1% and 1.3%, respectively.

Looking for IPE’s latest magazine? Read the digital edition here.