ATP delivers strong Q1 with a DKK 7.8bn return in the investment portfolio
In Q1, ATP generated a return before tax and expenses in the investment portfolio of DKK 7.8bn, equivalent to a return relative to ATP’s bonus potential of 7.8 per cent. The return was achieved broadly across the portfolio, but equity investments and credit investments yielded significant positive contributions. In the past five years, ATP has delivered an average return of 3.7 per cent per quarter and achieved positive returns in the investment portfolio in 18 out of 20 quarters.
Strong investment return
In Q1, the financial markets in Europe were characterised by price increases in the equity markets and moderate increases in interest rates, while interest rates in the USA ended up at roughly the same level as at the beginning of the year. The largest positive return came from listed Danish equities with a contribution of DKK 2.3bn, but listed international equities, private equity and credit investments also contributed high positive returns. ATP’s long-term hedging strategies against rising inflation produced a negative result of DKK 0.1bn.
“The really strong return for the first three months of the year – in fact, the highest quarterly return in the past five years – is very good news for our members, and something which I am very pleased with. But we should not be measured on our short-term returns. We are here to create long-term value for our members, and historically we have been very good at doing just that. Looking ahead, the prospect is of great uncertainty – economically and politically – both in Europe and in the USA, and delivering similarly impressive returns in the coming quarters and years will indeed be a challenge. However, we will continue to take risks to generate returns, but we will do so based on an extremely disciplined approach to both portfolio construction and risk management as a way of ensuring that we create satisfactory results in the long term despite the fact that we are operating in an environment characterised by low and uncertain returns.” says ATP CEO Christian Hyldahl.
Hedging protects pension guarantees
The hedging of pension guarantees is designed to ensure that members receive the ATP pensions promised, regardless of whether interest rates rise or fall. Primarily due to rising interest rates in Europe, the value of the guaranteed pension liabilities fell by DKK 11.2bn in Q1 2017. In contrast, ATP’s hedging portfolio generated a negative return after tax of DKK 10.8bn. All in all, the hedging activities resulted in a loss of DKK 0.4bn on pension guarantees with a total value of DKK 646bn. The hedging strategy was thus successful.
Profit for the period
The result for Q1 2017 was a profit of DKK 6.5bn. At the end of Q1, the bonus potential – ATP’s free reserves – totalled DKK 106.9bn, while assets amounted to DKK 753.2bn.
Further information
