LSR: Positive real return in a challenging operating year

22 April 2024

LSR publishes on its website:

There was a positive real return on all LSR’s joint and private property divisions in 2023, and the fund as a whole delivered a nominal return of 9.2%, which corresponds to a real return of 1.1%. Assets increased by ISK 112 billion during the year, and the fund’s total assets were ISK 1,405 billion at the end of the year. The real return for the last 5 years is 4.0% on average and the 10-year average real return is 4.4%.

The number of active fund members increased by more than 700 from the previous year, and their average number was 31,388. The number of pensioners also increased and their average number was 24,632 last year compared to 23,527 the year before. Pension payments in 2023 were over ISK 93 billion.

This is among the results of LSR’s annual accounts for 2023, which the fund’s board signed at its meeting on April 19. It also states that the net real yield of Division A of LSR was 0.9%, Division B 1.5% and at Séreign the net real yield of Leiðar I was 2.7%, Leiðar II 0.1%, Leið 0.7% III and 3.9% in Specified private property, which was established on July 1, 2023. The actuarial position of Division A increases from -5.8% to -1.5% year-on-year, which is explained by changes in the acquired rights that were implemented on the ticket year.

Considerable fluctuations in the market

Markets were volatile in 2023. Yields on the bond market were rising due to persistent inflation. Rising financing terms increased volatility and uncertainty in the domestic stock market, which fell sharply at the beginning of the year. Towards the end of the year, however, the inflation outlook worsened and positive news was received from large joint-stock companies on the stock exchange, which led to increases. Although it was not enough for the annual return on the domestic stock market to be on the right side of zero, foreign shares did return a good return, and the overall result was therefore a nominal return of 9.2%.

The fund’s portfolio at the end of the year was divided so that assets in bonds were ISK 565.7 billion, assets in shares and units were ISK 672.7 billion. and deposits amounted to ISK 53.9 billion. The percentage of assets in foreign currency was almost 41% and the percentage of indexed assets was around 34.3% of the fund’s portfolio at the end of 2023.

Source: LSR