IPF årsrapport 2018 (eng) - Flipbook - Side 8
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6
Investment activities
RETURN FOR THE YEAR
The result on investment activities was DKK -1.7
bn. after costs and before tax in 2018. This
corresponds to a total investment return for the
year on -1.0%. The return before costs was 0.3%.
The negative returns in 2018 occurred as a
consequence of a number of challenging market
movements that struck broadly across all listed
assets. The whole year was affected by a number
of uncertainties, including political uncertainty with
regard to Italy, the yellow vests in France and
Brexit.
Furthermore, various statements regarding trade
meant that a number of companies were uncertain
about future growth, leading to reductions in
expected earnings. This was particularly evident
in the fourth quarter, with heavy declines in prices.
Listed shares and credit pulled down returns
On listed share markets, in which Industriens
Pension has invested DKK 41 bn. (25%), returns
on Danish shares were -9.3%, while foreign
shares saw returns of -9.1%.
Credit bonds and emerging-market bonds (DKK
35 bn.) were also negatively affected by falling
expected growth and increasing interest rates in
the US. Overall, these bonds yielded -4.2%,
broken down as -3.3% on high-yield, -2.5% on
investment grade and -6.5% on emerging-market
bonds.
Gilt-edged bonds (DKK 37 bn.) increased
marginally in 2018, with a small positive yield of
1.1%.
Strategic hedging of inflation risk gave a negative
return in 2018 due to expectations of lower
inflation in Europe. This affected total returns on
the investment portfolio by -0.7 percentage points.
Table 7
Returns on assets 2018 (%)
Gilt-edged bonds
Return Benchmark
1.1
0.9
Other credit
4.3
-
Corporate bonds, high yield
-3.3
-4.6
Bonds, emerging markets
-6.5
-4.1
Bonds, investment grade
-2.5
-3.2
Shares, Danish
-9.3
-7.5
Shares, foreign
-9.1
-9.8
Unlisted shares
12.2
-
Properties
5.7
-
Infrastructure
9.9
-
Total
-1.2
-1.0
Total, including hedging of liabilities
-1.0
-0.9
Relevant benchmarks are used for listed assets,
and these are stated in the table. With regard to
unlisted investments, for which there are no similar
benchmarks, returns earned are applied. This
means a total drop in returns earned on listed
investment assets of 0.17 percentage points in
relation to the benchmark. For unlisted
investments, a number of other references are
used to assess the returns on the individual classes
of assets.
Satisfactory returns on unlisted investments
The portfolio of unlisted investments proved its
worth in a year like 2018, where market returns
were negative for most listed classes of assets.
The total portfolio of unlisted investments amounts
to almost DKK 49 bn. (29% of total investment
assets). Investments are in unlisted companies,
infrastructure assets, property and credit. The
majority are unlisted companies (DKK 18 bn.) and
infrastructure assets (DKK 19 bn.), which provided
a return of 12.2% and 9.9%, respectively in 2018.
Total investments in property (DKK 9 bn.) yielded a
return of 5.7%. This includes Danish properties
that Industriens Pension has invested in directly.
This part of the portfolio delivered a return of 6.8%.
The portfolio of Danish properties is still being
developed and it currently amounts DKK 3.4 bn.