Danish pension fund P+ divulged it ramped up its investment risk level over the course of last year, despite holding off heavy buying when shares bottomed in March – and is now in a position to nudge risk still higher.

Announcing a return of 6.65% in 2020 for its P+ Balance portfolio, the pension fund said comprehensive work had created more scope for risk taking.

Kåre Hahn Michelsen, CIO of Copenhagen-based P+, said: “Our in-depth work with risk management has also meant that we have raised our risk level during the year.

“So in the future, we expect to be able to take a little more risk – of course without compromising the robustness and breadth of our portfolio,” he said.

He described the 6.65% return for last year as satisfactory in a “turbulent year”, with the total return only having turned positive in August.

All assets contributed positively to the 2020 return, the DKK125bn (€17bn) pension fund said, adding that real assets had had a stabilising effect along the way.

The real estate portfolio, for example, delivered a 9.18% return, though P+ said shares in particular had proved decisive for the year’s total return, generating 11.43%.

Hahn Michelsen said the stock market had reacted surprisingly quickly and positively to political support for social economies, following the crash when the pandemic surged in March.

“In the light of hindsight, we could of course have invested heavily in equities when the market hit rock bottom,” he said.

“As a responsible pension fund, however, the amount of members’ risk we can afford to invest in the stock market is limited,” the CIO added.

He said the fund kept a cool head when the turmoil was at its most intense.

“We took advantage of the market opportunities that happened to come up, which meant, among other things, that we bought up shares when prices were low,” he said.

He said P+ had positive expectations for the current year, even though COVID-19 could still be expected to create upset and vulnerability in the market in the first half.

“However, as the markets turn around, we expect a certain ketchup effect, which will lead to a significant boost in corporate earnings and an improvement in the global economy,” Hahn Michelsen predicted.

P+ was formed from the merger of JØP, the pension fund for lawyers and economists, and engineers’ pension fund DIP in 2019.

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