Investment returns on unit-link pension products at Skandia Denmark undercut benchmarks in the second quarter of 2014, prompting the unit of Nordic financial group Skandia to sell shares in US companies.

Reporting some results for the April to June period, Skandia Denmark said its Skandia Match unit-link pensions product had produced between 2.9% and 3.8%, up from the 2.6% to 3.1% range reported for the first quarter but lower than the reference index.

The company said: “A significant reason for this are the falls partly on the Japanese stock market but particularly on the US market at the start of the quarter.

“Skandia’s investment department has since reduced the exposure to both small and large US companies.”

The unit-link product Skandia Basic similarly ended the quarter with higher returns than those posted in the first quarter – 2.5% to 4.4% versus 0.7% and 1.3% – but underperformed the benchmark in the second quarter.

“This is because the reference index is denominated in US dollars, which rose significantly in value during the period,” Skandia Denmark said.

Because of this, the Basic portfolio – although it was hedged against currency risk versus US dollars – lost ground against the reference index, it said.

Skandia said its investment department had decided to overweight equities in the portfolio compared with bonds because financial markets had been hit in the second quarter by a series of measures from central banks to ease credit.

But with Danish mortgage bonds making up the bulk of Skandia Denmark’s fixed income portfolio, fixed income returns had been boosted by a further reduction in interest rates, as well as the European Central Bank’s lending programme to the financial sector at the end of the quarter.

“On top of this,” it added, “as a result of positive tendencies in emerging markets, we increased our exposure to government bonds from these countries.”

In other news, PensionDanmark is investing DKK175m (€23.5m) in a commercial property in Copenhagen already let to a government agency.

It is buying the asset from MP Pension, the Danish labour-market pension fund for academics run by Unipension.

The building in the Østerbro district of the Danish capital is currently leased by the Danish Working Environment Authority (Arbejdstilsynet), and contains 14,273sqm of space.

Torben Möger Pedersen, PensionDanmark’s chief executive, said: “We see this as a good real estate investment in an attractive location close to the S-train (urban rail network) and the coming metro station on the Cityring.”

He said the pension fund had a very solid tenant in the Danish Working Environment Authority – and therefore the state – so the investment would give scheme members a good and stable return.

PensionDanmark said, since it sold its entire residential property portfolio in June, it now had just under DKK10bn in overall real estate investments.

In the next few years, the fund said it expected to make new investments in residential as well as commercial property of DKK2bn a year.

At the moment, PensionDanmark is the developer of six large commercial construction projects, either alone or in cooperation with other investors.

These include the Alfa Laval headquarters in Ålborg, Semco Maritime in Esbjerg, Nordea Bank Danmark in Ørestaden, NCC in Gladsaxe and, soon, MTH in Søborg, as well as the new psychiatric hospital in Vejle.

Its next big residential project will be the construction on Islands Brygge in Copenhagen, which will include 550 new homes.

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