PFA has seen a strong comeback in the first quarter of 2019, returning DKK27.3bn in its best quarter since the same period in 2015, the Danish pension provider said.
The positive return was a result of positive markets. Depending on their selected investment style, PFA customers’ returns ranged between 3.1 per cent and 10.0 per cent, and the total return related to market rate amounted to 6.7 per cent.
The return related to average interest rate was 5.1 per cent, and listed equities was the portfolio which had the most positive contribution – 11.9 per cent.
PFA group CEO Allan Polack said in a statement that the first quarter was a great success for its pension savers.
“The foundation of the high returns was laid already in January, when especially equities gained a general momentum after the financial unrest and significant drops in the equity markets during December. Equities have not seen a better start to the year since 1987. At the same time, we experienced new declines in interest rates, which resulted in attractive bond returns,” Polack explained.
“When considering the development on the financial markets over the past six months, it is hard to believe that it is two consecutive quarters. While the last months of 2018 looked bleak, and we peeped into the new year with great scepticism, things took a U-turn around year-end 2018. And here we are, three months later, with an almost historically good start to a year of returns.”
According to the provider, the positive quarter has more than made up for the loss in savings in 2018. This followed the increasingly positive notes in the trade conflict between the US and China as central banks postponed the tightening of monetary policies previously announced.
At the same time, PFA noted, the equity market has seen a strong reaction to the correction in December which triggered sharp drops.
The provider has, based on the prospect of an expected volatile market and moderate returns, increased investments in alternatives and properties since 2016. Unlisted investments passed DKK 95bn in Q1 and has been a stabiliser in times of market unrest.
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