Oslo Pensjonsforsikring (OPF), Norway’s largest independent municipal pension fund, reported its highest annual investment return for 12 years in 2017 with infrastructure holdings gaining 32%.

The common portfolio, which invests OPF’s pension assets, returned 9.2% on a value-adjusted basis for 2017, up from 2016’s 5.3% return.

The pension fund said this was the highest result since 2005.

OPF’s solvency ratio increased in the fourth quarter of 2017, rising to 514% at the end of 2017 without taking into account the transitional rules for Solvency II introduction. This was up from 501% at the end of September.

Åmund Lunde, OPF’s chief executive, said: “The high capital coverage allows us to withstand significant fluctuations in the financial markets without unwanted adjustments in the portfolio.”

Four of OPF’s 13 asset classes made returns of more than 10%, the pension fund said, led by infrastructure with a 32% return. Equities gained 21%, and real estate produced 10.3%.

Infrastructure made up 2.6% of the common portfolio, while equities and real estate accounted for 20.2% and 18.7% respectively.

Lunde explained after the fund’s third quarter results that the high return on infrastructure investments had been largely due to some infrastructure funds maturing and selling their assets at higher prices than expected.

KLP rides equity rally to post 6.7% return

Meanwhile KLP, the Norwegian countrywide municipal pensions provider, reported it made a 2017 investment return of 6.7% on back of strong gains on equities and real estate.

Total assets for the KLP Group grew to NOK652bn (€67.4bn) at the end of 2017, the pensions provider reported, up by NOK56bn over 12 months.

In the common portfolio, which makes up NOK496bn of the group’s overall assets, property returned 8.9% and shares (including equity derivatives) produced 16.5%.

KLP said it had achieved returns during the year amounting to NOK7.1bn more than it had guaranteed its customers, and was using the results to transfer NOK5.2bn to the customers’ premium fund – an amount it said was three times the planned contribution.

Sverre Thornes, KLP’s chief executive, said: “With such good returns we are in a position to send more than NOK5bn to the companies, the municipalities, the counties and the health enterprises that own us.”

He added: “The profits also allow for a further strengthening of the company’s solidity.” This made KLP well equipped to withstand more difficult markets without its customers noticing it, Thornes said.

On the business side, KLP said assets under management were growing well, but that there were “minor movements in the customer base”.

It said it was following Norway’s ongoing municipal and regional reform closely, which it said “may lead to minor changes”.

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