Danish pension fund ATP’s investment portfolio earned DKK4.1 billion ($640 million) before tax and expenses during the first half of the year, equivalent to a return of 3.4%, to reach a total market value of DKK302.1 billion, the fund reported.
Private equity investments, infrastructure investments, and real estate investments were the primary drivers of the return, while investments in listed international equities weighed down the fund’s performance.
“Our balanced investment portfolio has proved resilient in a difficult H1,” Christian Hyldahl, CEO of ATP, said in a release. “We have assumed more risk within the framework provided by the supervisory board. We do so based on an extremely disciplined approach to both portfolio construction and risk management as a way of ensuring that we create satisfactory results in the long term despite the low and uncertain return environment.”
Listed Danish equities posted a return of DKK600 million, as holdings in Rockwool International and Coloplast were the main positive contributors to its performance, while holdings in A.P. Møller-Mærsk and Pandora had a negative impact on the portfolio.
Listed international equities, consisting of US, European, Japanese, and emerging markets equities, recorded a negative return of DKK2.1 billion. Listed emerging markets equities were the main negative contributors to performance, but equity investments in developed economies also contributed negatively to the returns.
The overall portfolio of private equity generated a return of DKK1.8 billion, with the return in ATP Private Equity Partners accounting for DKK1.1 billion. The portfolio of infrastructure investments, which includes forestry investments in North America and Australia, as well as investments in renewable energy, generated a return of DKK1.5 billion. Real estate investments generated a return of DKK1.4 billion.
ATP said the value of the guaranteed pensions increased by DKK16 billion during the first half of the year, mainly due to the decline in interest rates in Europe. It added that its hedging activities resulted in a loss of DKK1.8 billion on pension guarantees out of a total value of DKK684 billion, which it deemed a successful strategy.
The fund also said that an in-depth review of the life expectancy model resulted in an adjustment of the long-term life expectancy forecast, and the fund provided an additional DKK20 billion for increased life spans.
As of the end of the first half of the year, there were 1,047,000 pensioners receiving an ATP Livslang Pension (lifelong pension), and pension payouts totaled DKK8.4 billion. Payouts increased relative to the same period last year, reflecting mainly an increase in the number of pensioners.