ATP, Hilleroed, Denmark, posted a 26.9% return on its investment portfolio for the six months ended June 30, owing the outsized gain to falling interest rates and positive performance of the fund's foreign and domestic equity strategies.
An update Wednesday said the pension fund's net increase equaled 24.8 billion Danish kroner ($3.7 billion), compared with a return of 2.7%, or a rise of 3.2 billion kroner, for the six months ended June 30, 2018.
Assets increased 12% to 880.8 billion kroner from Dec. 31, and grew 12% over the first half of 2018
The fund's investment portfolio is split according to risk factors. As of June 30, equity risk factor accounted for 42% of the portfolio; interest rate risk factor, 33%; inflation risk factor, 17%; and the remaining 8% was attributable to other risk factors. For the three months ended June 30, the biggest contributing asset class was government and mortgage bonds at 14.5 billion kroner.
While the return was "highly satisfactory," ATP CEO Bo Foged said in a news release, "Uncertainties regarding the development in both the interest and equities markets require ... that we continue with disciplined risk management and portfolio construction. This is essential for our ability to also produce satisfactory results in the long term."
International and listed Danish equities gained 5.9 billion kroner and 4.4 billion kroner, respectively. Mr. Foged said in a telephone interview about half of profits came from U.S. equity. Emerging market equity yielded about a fifth of the fund's profits, he said.
Private equity added 1.9 billion kroner, while real estate and infrastructure each gained 1.2 kroner. Credit contributed 2.7 billion kroner, and inflation-related instruments added 2.6 billion kroner. Other investments added 347 million kroner.