Danish pension fund manager PKA reported a 5.3% return on investments for 2020, below its 7% average over the last 10 years, saying its infrastructure and real estate investments lent an element of stability to the portfolio when equity markets were at their most volatile.
The firm, which manages around DKK330bn (€44.4bn) for four labour-market schemes, said in today’s investment results announcement that in absolute terms, the return on investments came in at DKK14.4bn.
Michael Nellemann Pedersen, PKA’s CIO, said: “We focus on being able to create a stable return for our members, even when the markets move a lot, as they did in 2020.
“So it is satisfying that we have been able to maintain our investment strategy, even when the declines in the listed markets were at their greatest,” he said.
The provider was also well positioned to continue making good and stable long-term returns, he said.
PKA singled out listed shares and unlisted investments in small and medium-sized firms as two asset types that had contributed the overall 2020 return.
Last November, the pension fund announced it was investing DKK22bn in private equity over the next three years, via a fund set up by its subsidiary Institutional Investment Partners Denmark (IIP Denmark), to invest in unlisted small and medium-sized companies.
PKA said in the results statement today that its strategy for diversification across a wide range of asset classes had helped it to avoid very large losses as a result of COVID-19.
“Investments in infrastructure such as wind turbines and solar cells as well as real estate investments provided stability in the portfolio, when fluctuations on equity markets were at their greatest,” the pension fund company said.
The firm, whose four pension fund clients primarily serve employees in Denmark’s health and social care sectors, also said it had reached its goal of DKK30bn in green investments in 2020, corresponding to 10% of its total assets.
Nellemann Pedersen said this figure would continue to increase in years to come.