Denmark’s ATP made only the slimmest of investment returns in the third quarter of this year, generating around 0.15% on its DKK100bn (€13.4bn) investment portfolio, due to “difficult market conditions”.

The latest figures showed losses on domestic equities had been offset by gains on private equity.

Reporting interim financial figures for January to September, statutory pension fund ATP posted an investment return of 9.6% before tax and expenses, or DKK9.2bn, up only marginally from the DKK8.9bn reported at the half-year stage.

Carsten Stendevad, ATP’s chief executive, said: “After years with unusually stable returns across asset classes, the financial markets have now become more volatile. That reflects the significant challenges the global economy is facing.”

ATP said the result for the first three quarters of the year had been created by high investment returns in the first half of the year, while market conditions had become more difficult towards the end of Q3.

“Difficult market conditions continued into Q4,” the pension fund said.

For the third quarter alone, ATP reported an investment result before tax on pension savings returns and income tax of just DKK136m, compared with DKK8.73bn for the first three quarters put together.

In the first three quarters, equity investments produced a DKK7.7bn return, up from the DKK6.9bn generated in the first two quarters alone. 

Within this, listed Danish equities produced DKK2.9bn, down from DKK3.2bn at the end of June, unlisted equities returned DKK3.4bn, up from DKK2.4bn, and listed global equities returned DKK1.5bn, up from DKK1.3bn.

ATP said three out of the five risk classes in its investment portfolio – equities, interest rates and credit – had delivered positive returns in the first nine months of the year, while inflation commodities made losses overall. 

Within the inflation risk class, insurance strategies against interest rate increases lost money for ATP, and the commodities loss was due to a drop in oil prices, the pension fund said.

With the vast majority of its assets belonging to its hedging portfolio – designed to safeguard the guaranteed pension promises it makes – ATP’s total assets grew to DKK666bn at the end of September, from DKK641bn at the end of June and from DKK592bn at the end of 2013.

ATP said its hedging portfolio generated a return of DKK82bn before tax in the nine-month period, equivalent to DKK69.5bn after tax, and just undercutting the DKK70.7bn the pension fund provisioned for members’ guaranteed pension liabilities.

As the hedging loss of DKK1.2bn equated to less than 0.25% of ATP’s guaranteed benefits of DKK 564.8bn, it was “considered to be satisfactory”, ATP said.

Topics