Icelandic pension funds post 7.3% returns in first half; private savings hold up | News

Icelandic pension funds returned an average of 7.3% in the first half of the year, according to new figures from the industry association, with foreign investment weightings remaining stable – and private pension savings rising despite the pandemic measure allowing withdrawals.

Overall, Icelandic pension funds saw their total assets reach just over ISK 6.15 billion (41.5 billion euros) at the end of June, the Icelandic Association said. pension funds (Landssamtök lífeyrissjóða, LL) in a press release on the interim results of its members.

This compares to the 6.05 billion ISK managed by the sector at the end of 2020, as reported by the Icelandic central bank.

LL said: “Foreign assets make up just over a third of all fund assets, and that proportion has remained fairly stable so far this year.”

Pension funds in Iceland have replenished their allocations to foreign investment in recent years since the country relinquished its capital controls after the crisis.

With foreign assets reaching a 34% weighting for all pension funds at the end of 2020, the central bank said in April that funds had so far reduced their purchases of foreign currencies during the year. .

He said this could indicate that some funds were close to meeting internal targets for foreign assets.

LL also said in its first-half figures release that private retirement savings held by pension funds had increased since the start of 2021 to around 10% of total fund assets at the end of June.

“This type of savings has grown by 8.6% so far this year, despite the current authorization of special disbursements from private retirement savings due to COVID-19,” the lobby group said.

Pension fund lending continued to fall between January and June, he said, with loan repayments exceeding new fund lending by ISK 24 billion.

The bulk of those repayments – ISK 32 billion – were for indexed loans, he said, with only ISK 8 billion of non-indexed loans having been repaid.

“Recently, there has been a rapid shift in household mortgage lending from indexed to non-indexed lending, and when you look at all lenders, around half of household mortgage lending is now non-indexed,” commented LL.

Total loans granted by pension funds to households amounted to ISK 486 billion at the end of June, he said, adding that it was almost a quarter of all household housing loans in Iceland.

Elsewhere, pension fund Almenni said its balanced pension options had yielded between 4.1% and 8.3% in the first half.

The pension fund said all of its investment options produced positive returns during the period, except for its short-term government bond portfolio, which posted a loss of 0.1% .

Almenni said: “The MSCI World Equity Index rose 13% in US dollars in the first six months of the year, but rose 9.5% in Icelandic krona as the Icelandic krona strengthened. against the dollar during the period.”

The domestic stock market, meanwhile, has rallied since late March, he said, with the main index rising 22% in the first half of the year.

Two companies had made the main list in the first half of the year, Almenni said – fish processing company Síldarvinnslan in May and Íslandsbanki bank in June.

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