Danish pension funds’ returns recover from Covid-19 impact

The financial returns of Danish pension funds MP Pension and Danica Pension recovered in Q2 2020, after falling in first three months of 2020 due to the impact of Covid-19.

In March 2020, MP Pension reported a return of around -13 per cent, while Danica Pension saw a return of approximately -15 per cent.

However, both funds recovered in Q2 2020, with MP Pension seeing a half-year return of -1 per cent and Danica Pension reporting a -4.3 per cent return in the first six months of 2020.

In comparison to 1 January 2019, the average Danica Pension customer has seen their returns increase by 14.6 per cent

"It's never nice to see the value of one's savings crumble,” said MP Pension chief investment officer, Anders Schelde. “Minus 13 per cent was huge, so in that light, -1 per cent is satisfactory."

Danica Pension warned that the markets remain characterised by large fluctuations but said that being patient and calm had paid off “once again”.

Danica Pension investment director, Poul Kobberup, said: “Investments of pension funds are long term - therefore it is important to look at its return over more than 3 or 6 months.

“As a pension company and manager of customers' savings, we are of course long-term investors, and therefore we have stuck to our strategy and risk level.”

Both funds expressed some optimism that their recovery would continue, but also warned that global uncertainty and volatile markets may persist.

Schelde commented: "The corona crisis has shown that it can be difficult to predict markets in the future.

"We are cautiously optimistic and hope to land around zero or maybe even slightly positive. It is important to remember that retirement should be seen in the long run, so one bad year doesn't mean much.”

Kobberup added: “We must see economic progress, but we also believe in that, and in that case we still expect that there is room for increases in the stock markets, that customers' returns continue to move in the right direction.

“But this has been said with great reservations, as the entire world economy is very uncertain, and it does not take much to change the moderately positive mood that is, after all, at the moment.”

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