The reaction to Trump’s election from several European pension funds has been to state that it is too early to give a definitive assessment of its meaning, not least as it is unclear how his rhetoric will translate into policies.

Kasper Ahrndt Lorenzen, CIO of ATP, expressed confidence about the resilience of the DKK805bn (€108bn) Danish pension fund’s investments.

“We have a contingency plan prepared to mitigate the market reactions,” he said. “Political risk is an ongoing part of the markets, and I’m confident the robustness of the portfolio can withstand this event as well.”

Henrik Henriksen, chief strategist at Denmark’s PFA Pension, said the election result would prompt a risk-off reaction from investors.

“Markets and investors will remain anxious in the near future because Trump’s rhetoric and proposal to introduce tariffs on foreign goods has sparked fears of a slowing in global trade and, thereby, lower global economic growth,” he said.

“The increased uncertainty will make investors head for safe havens such as bonds, gold, yen and Swiss francs.”

He noted that the Republican Party’s winning control in both houses in Congress increased Trump’s chances of delivering his promised expansive economic policy, which could be positive for growth and reduce his focus on changing trade pacts, which the markets fear.

Timo Viherkenttä, chief executive of Finland’s State Pension Fund, VER, compared the US presidential election with the EU referendum in the UK at the end of June.

“It is still early to know the ultimate market reaction,” he told IPE. “If the bounce-back after the immediate drop is sustained, one can compare this with the market’s Brexit referendum reaction, which turned out to be a temporary one except for the pound.”

However, Viherkenttä noted that the Brexit reaction lasted somewhat longer than the initial US election effect, which was largely retraced within hours.

“Of course, there is still a lot of uncertainty concerning the economic policy of the incoming US administration and Congress,” he said.

In the Netherlands, the CIOs of major pension investors APG and PGGM declined to comment.

Marcel Andringa, CIO of the €45bn metal scheme PME, said he expected the markets would calm down soon.

Harmen Geers, spokesman for APG, said it was too early to draw conclusions from APG’s perspective as a long-term investor.

He said APG was assessing whether all its scenarios covered the full impact of Trump’s election.

According to Geers, APG hedged against a drop of the US dollar and prepared itself for the expected volatility by keeping sufficient liquidity as collateral.

According to Dennis van Ek, actuary at Mercer, many pension fund clients made inquiries about the possible scenarios ahead of the US elections.

None, however, had taken concrete steps, as the outcome would be too close to call, he said.

Based on market reactions as at early afternoon today, van Ek said the outcome of the election had only slightly affected Dutch pension funds’ funding.

He said limited losses on European equity markets and the Dow Jones’s futures, combined with the 30-year swap rate – pension funds’ main criterion for discounting liabilities – steady at 1.05%, had led to a funding loss of 1 percentage point on average.

At October-end, the average coverage ratio was 99%.

In Germany, Rainer Jakubowski, CFO at BVV, the €26bn pension provider for the country’s financial industry, said: “A qualified statement or even a prognosis on the effects of the – ultimately surprising – results of the US elections on the capital markets or our investments is, of course, not possible at this point in time.

“We know nothing about actual plans of Trump, specifically not regarding economic politics. In this case, it is probably best to stick to the stock market wisdom that political stock markets have ‘short legs’.”

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