Icelandic pension fund Almenni reported returns in the first three months of this year of between 3.7% and 4.5% for its balanced strategies investing in both bonds and stocks, with exchange rates having magnified gains on foreign equities in the period.
Almenni said all seven of its investment strategies had produced positive nominal and real returns in the first quarter of the year, with Life Portfolio I (Ævisafn I) having produced the highest return out of the balanced portfolios, having risen by 4.5% in the first quarter — equivalent to a real yield of 2.1%.
“MSCI’s world index of foreign shares rose by 4.8% in dollars or by 7.9% in Icelandic króna in the first four months of the year, as the króna has weakened against the dollar during the period,” the pension fund said.
The domestic stock market had a tough time in the first few months of the year with the prices of most listed companies having declined since the beginning of 2023, it said.
“The overall index of the main list rose by 2.5% in the first third of the year, and this is largely due to the increase in [biotech firm] Alvotech, which has a weighting of more than a fifth of the index of the main list,” Almenni said.
Looking ahead, the Reykjavik-based pension fund said the outlook for returns in 2024 remained mixed.
Inflation had subsided in many countries and it was likely that central banks, in the US, for example, might start cutting interest rates — though it was uncertain when that would begin, the pension fund said.
“In Iceland, there is uncertainty due to earthquakes in Reykjanes, and their continuation could have some effect on the economy,” Almenni said.
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