Danish pension fund PFA - the largest of the country’s big five commercial providers - has posted its highest-ever return in one year after equities generated an 18.8% profit in the first nine months of 2019.

Kasper Ahrndt Lorenzen, who recently left Denmark’s statutory pension fund ATP to become PFA’s new group CIO in September, said: “2019 has turned out to be a year where it has paid off to take risks. The greater your risk appetite, the more your savings have grown.”

Following a total return of DKK17.6bn (€2.3bn) in the third quarter, PFA reported its total investment return for the nine months to the end of September came to DKK57.3bn before tax, which was more than any full-year return the firm had ever made.

In the first nine months of 2018, its return was DKK8.3bn.

Savers with market-rate pensions received a return of between 6.4% and 13.7% for January to September, depending on age and risk profile, the firm said.

Meanwhile, customers with average-rate products saw a 15.4% return in the period, PFA said, adding that returns for these products had been driven particularly by interest-rate hedging in connection with the drop in interest rates.

Among PFA’s other asset classes, alternative investments returned 8.6% between January and September, real estate produced 4.1% and bonds returned 5.8%.

PFA said there was still cause for investment optimism for the rest of the year, with the dark clouds seen at the beginning of 2019 having thinned out somewhat.

“The central banks in the US, Europe and Asia have all lived up to the market’s expectations with further rate cuts, while the trade war between China and the US is somewhat on hold,” it said.

At the same time, PFA said the US economy showed promise with a high level of demand and a continued low unemployment.

But it said there were also risks pointing the other way, with growth in China and Europe declining, and political uncertainty over Brexit.

Ahrndt Lorenzen warned it was important to remember the situation could easily change.

“Looking back just a year, the situation was completely different with worries of a significant downturn on the financial markets being imminent. Therefore, it is important to have a portfolio composition that performs well, both when the financial markets face favourable and unfavourable conditions,” he said.

At the end of 2018, PFA had total assets of DKK576bn.