Danish labour-market pension fund PensionDanmark reported a dip in investment returns in the first half of this year, as losses on domestic bonds showed through.

The pension fund, whose total assets grew to DKK181bn (€24.2bn) by the end of June from DKK165bn at the same point last year, said in its interim report that contributions had risen as a result of rising employment among the businesses whose pension schemes it ran.

Torben Möger Pedersen, PensionDanmark’s chief executive, said: “Recent developments on the equity markets show that there are still big imbalances in the global economy, and that we are probably looking at a long period of lower and very volatile returns on shares and bonds.”

It was against this background that the pension fund was focusing on putting together a portfolio that could do well even when there were big fluctuations in these markets, he said.

“For this reason we have continued to expand our investments in stable alternatives, such as infrastructure and property, which now account for 20% of the portfolio,” Möger Pedersen said.

The return on investments was DKK7.87bn before tax in the first half 2015, down from DKK9.92bn in the first half of 2014, according to interim results.

In percentage terms, returns on pension savings for the six-month period ranged from 2.7% for members aged 65 and 6.1% for those aged 40.

This compares with 6.6% and 6.5% respectively in the same period last year.

PensionDanmark said returns for the age-related investment pools reflected the fact that younger members had a greater proportion of their savings in equities and so had benefited from the fact shares had produced a better return than other investments in the period.

The pension fund’s investments in quoted shares had generated a 10% return, which was in line with the general development on international stock markets.

On the other hand, bonds had been marked by the increase in yields in the first half, which had led to price falls on the Danish bond market.

PensionDanmark’s holdings of Danish government bonds and mortgage bonds made a loss of 1.6% in the period, while investments in corporate and emerging markets bonds produced between 1.8% and 2.2%, it said.

Regular contributions grew to DKK5.28bn in January to June 2015 from DKK4.98bn in the same period last year, PensionDanmark said.

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