NOW: Pensions, the UK multi-employer trust launched by Denmark’s ATP, generated a return of 9.1% in 2013 on its diversified growth fund (DGF) – the only investment option available for members.
In the first year of the fund’s existence, the return was lower than the 10.56% return reported for the model portfolio the company ran in 2012, according to data on the company’s website.
It was also lower than the 60/40% equity/bond portfolio NOW: Pensions compared its return with, which produced a 11.98% profit on investments.
In line with the approach of its parent, Danish statutory pension fund ATP, NOW: Pensions divides investments in its DGF into five risk classes rather than using traditional asset class labels.
The equity risk class – which makes up the lion’s share of the portfolio, with a 35% target exposure — produced 8.2% over the fourth quarter of 2013.
The main driver had been the easing of macroeconomic uncertainty in the US and strong economic indicators, NOW: Pensions said.
The rates risk class made a loss of 1.8% in the quarter, as result of “an improving global economic outlook at the Fed’s decision to taper bond purchases”, it said.
Inflation delivered a flat return of 0.11%, hit by the European Central Bank’s interest rate cut in November, and the credit risk class returned 2.5%.
Commodities made a flat return, the company said.
The low-cost fund – which has an annual management charge of just 0.3% – has an objective of returning 3 percentage points more than cash, as measured by the Sterling OverNight Index Average (SONIA), over a rolling five-year period, the company said.
In 2013, SONIA plus 3% was 3.44%, according to NOW: Pensions.
The DGF currently has less than £50m (€61m) in assets.
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