Danish Lønmodtagernes Dyrtidsfond (LD) has lost DKK 311m (€42m) so far in 2018, blaming a defensive investment strategy.
The pension scheme’s credit investments returned -1.6 per cent, while its shares returned around zero, both under the respective benchmark index.
Alternative investments yielded 1.7 per cent but was still lower than return requirements, the fund said in a statement.
Gold-guaranteed bonds gave a 0.6 per cent return, which was above the benchmark.
The lack of investment in growth shares was a major cause behind why LD did not meet the equity benchmark, the fund said in a statement.
“LD’s defensive equity strategy meant that LD was significantly underexposed to growth assets which provided relatively high returns during the period.
“This, amongst other, include global players like Facebook, Amazon, Apple, Netflix and Google, all of which have had major price increases over a long period of time, but have also showed great fluctuations over short periods,” LD wrote.
While LD said the result was “definitely not satisfactory” for the majority of its members, the fund is still rated as one of the top 10 per cent funds in Europe, according to Morningstar.
A strong US economy and good growth prospects in the rest of the world would normally result in a financial market growth, but political withdrawals in relation to customs and trade from the American president has resulted in uncertainty, the fund explained.
“Relatively speaking, the return is therefore considered to be very satisfactory,” LD said.
Recent Stories