Luminor fund manager, Vahur Madisson, has condemned what he sees as a growing trend of pension fund management companies in Estonia targeting competitors with “personal” criticism, warning that this shift undermines the traditional spirit of cooperation in the market.

Writing on the firm’s website, Madisson said that while the Estonian pension industry had typically focused on explaining strategies and understanding client needs, recent commentary had become “increasingly directed not so much at the market situation, but at specific actors”.

He questioned whether such criticism was still rooted in clients’ best interests or whether it had become “a means of protecting market position”.

While acknowledging that strong competition can drive fund managers to “work harder, be better and offer more value”, Madisson cautioned against allowing it to become personal or reputational.

“Such an approach may contradict the principles of the prohibition of unfair competition,” he said, calling for pensions to be treated “with respect and responsibility” towards both clients and competitors.

Defending Luminor’s strategy, Madisson pointed to what he described as “long-term results that speak for themselves”.

According to the Estonian Pension Center, Luminor’s 16-50 pension fund was the best-performing actively managed second-pillar pension fund in 2024, with a return of 22.71 per cent.

“The 10-year average return of 5.74 per cent also shows consistency and strong value growth," Madisson added.

"These results place our fund at the forefront of actively managed pension funds in Estonia,” he emphasised.

Meanwhile, Madisson stressed that Luminor’s actively managed funds were not opposed to the market or index fund approach, noting that passive instruments are used where they help control costs, achieve broad diversification and deliver maximum client benefit.

“In the current market situation, a portfolio similar to the market index has been a conscious decision,” he explained, claiming that diversifying away from the index would not have improved results.

He also highlighted that the Luminor 16-50 pension fund’s investment policy allows for greater diversification than a classic index fund, including allocations to real estate and private equity - asset classes that index funds do not typically hold.

Indeed, the firm invested €18.35m in private equity investment fund INVL Private Equity Fund II back in February.

“Our goal is not to simply passively mirror market movements, but to provide a strategy that can outperform the market over the long term,” Madisson clarified.

Madisson is an active commentator in the Estonian pensions market.

He previously argued that a 10-year wait to rejoin the Estonian second-pillar pension system should be reduced, as Luminor's research showed that a third of citizens would like to rejoin the pension system.

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