PFA Pension, Denmark’s largest commercial pension fund, said it was keeping a sharp eye on patches of overpricing in the equity and bond markets as significant political risks remain.

Anders Damgaard, CFO of the DKK607bn (€81.6bn) fund, said: “Despite the strong development on the equity markets and in the global economy in the last few months, in our opinion there are still significant political risks in the form of, among other things, the French presidential election, and both bond and equity markets are looking expensive in places.”

The first round of the French presidential election is taking place on 23 April, with the second, decisive round happening on 7 May.

It was crucial for the pension fund to take good care of its customers’ money and not take unnecessary, large risks, Damgaard said.

“We are keeping an eye on this on an ongoing basis, and are working purposefully to position our portfolio to be robust in the face of fluctuations,” he said.

His comments followed PFA’s first-quarter results, which showed the fund benefited particularly from its higher-risk assets, including equities.

PFA’s equities portfolio made good returns relative to the market in the three-month period, Damgaard said. Overall, the fund produced a 7.2% return for customers between January and March.

“We are also pleased that our low-risk fund gave a positive return in spite of the fact that many parts of the bond market had resulted in negative returns because of rising yields,” Damgaard said.

However, this did not mean risks had disappeared, he warned, adding that PFA was not about to put all customer money into equities.