2020 has also been an unusual year in terms of investment, and corona has left a clear mark on this year’s return, which has landed at a total of 2.6 per cent. for members at market interest rates and 1.8 per cent. before interest hedging and 7.9 per cent. after for members at average interest rates.
The return for ISP members in market interest rates has ended at a total of 2.6 per cent. for 2020.
“Fortunately, there is a long way to go to the double-digit negative returns we experienced in the spring, but we recognize that the end result could have looked better,” says Henrik Olejasz Larsen, Investment Director at Sampension.
A member with up to 15 years to retirement with moderate risk achieved 2.7 per cent. in return, while for a similar saver on the way to retirement it was 2.5 per cent.
In the average fixed income portfolio, the return was 1.8 per cent. for the year before interest hedging and 7.9 per cent. after interest coverage.
The low return is due to the overweight position of equities, the underweight side of bonds and a portfolio of alternative investments that are under construction. The three factors combined were not the best combination in the first half of the year, when covid-19, and the consequent massive stimulus from central banks and fiscal policy, created big winners and losers in the financial markets.
Alternative investments cover investments in, for example, unlisted shares, properties, infrastructure and forestry, of which ISP is currently building up a portfolio.
“It is a process that has got off to a good start, but which extends over a number of years. That is why ISP’s return on alternative investments is different – and lower than, for example, Sampensions, ”explains Henrik Olejasz Larsen.
In 2020, the price of growth stocks rose even more, and conversely it fell on the value stocks. It is not uncommon for growth and value stocks to rise and fall relative to each other, but during 2020 the difference in returns was up to around 30 per cent.
“This is an incredibly large difference that has never been seen before, and even small differences in the pension companies ‘shareholdings at the beginning of 2020 gave large differences in the pension companies’ return on equity, especially in the first half of 2020,” explains Henrik Olejasz Larsen.
He adds that ISP has maintained its investment strategy through 2020 and continues to maintain a preponderance of value stocks.
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