PensionDanmark reported all its asset classes produced positive returns last year, topped by a 17% gain for listed shares, with the result coming at a point when the Danish pension fund is set to increase its equity allocation as part of a broader corporate strategy change.
Announcing headline returns for 2024, the DKK330bn (€44.2bn) labour-market pension fund said yesterday that the overall return for members under 46 was 10.7% for the year and 7.8% for those around retirement age.
Within listed equities, significant gains were seen from large US technology shares, helped by the breakthrough in artificial intelligence in the past few years, the blue-collar pension fund said.
Claus Stampe, PensionDanmark’s chief investment officer, said it felt good to provide members with returns that were significantly above what could typically be expected.
“Not least in light of the fact that the start of the year was marked by concerns that inflation and high interest rates would end up sending the US and Europe into recession,” he said.
“But fortunately, inflation slowed down and paved the way for interest rates to come down before the economies really slowed down,” he said.
Both listed and unlisted credit investments had also helped boost returns in 2024 with returns of 6-10%, the pension fund said, especially for older pension scheme members, who had fewer shares in their portfolios compared to younger age groups.
Stampe told IPE that as part of PensionDanmark’s new corporate strategy, the pension fund was also adjusting its investment strategy.
“We will begin the implementation in 2025,” he said.
“We will increase the equity share particularly for younger members, and postpone the starting point for risk reduction from age 45 to 50,” he said.
PensionDanmark first announced the investment element of the new corporate strategy back in the autumn, when chief executive officer Peter Stensgaard Mørch, told Danish financial daily Børsen the pension fund would add more equity to savers’ portfolios in the hope of providing a better return and keeping up with strong years on the financial markets.
Another of the investment initiatives in the strategy is to target direct investments in venture companies – a drive Rune Gade Holm, PensionDanmark’s head of private markets, told IPE about late last year.
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