Icelandic pension fund provider Almenni-Lífsverk has reported positive returns across all of its return instruments in the first four months of 2026, despite heightened market volatility linked to conflict in the Persian Gulf.

The provider said mixed return instruments investing in both bonds and equities delivered returns of between 1.2 per cent and 2.1 per cent during the period, while foreign securities portfolios rose by 0.6 per cent.

Portfolios investing in domestic bonds and deposits increased by between 3 per cent and 3.6 per cent.

Its deposit portfolio produced the strongest performance, rising by 3.6 per cent in the first quarter, equivalent to a 0.5 per cent real return.

Almenni-Lífsverk highlighted strong gains in global equity markets during the opening months of the year. However, it noted that markets experienced significant swings following the escalation of tensions in the Gulf region.

The MSCI World Index increased by 5.7 per cent in US dollar terms over the first four months of the year, which translated into a 3.9 per cent rise in the Icelandic króna due to the strengthening of the domestic currency.

The provider explained that global markets initially rallied before reversing course at the end of February amid growing uncertainty linked to the conflict in the Persian Gulf.

Equity markets later recovered following a ceasefire agreement between the United States and Iran in early April, supported by strong corporate earnings.

Domestically, the Icelandic equity market struggled during the period, with the main index falling by 2 per cent in the first four months of the year.

Almenni-Lífsverk attributed this to persistent inflation, higher interest rates and uncertainty around economic growth prospects.

Meanwhile, the Central Bank of Iceland maintained its policy rate at 7.25 per cent in February, then increased it to 7.5 per cent in March.

The provider noted that rising bond yields reduced the value of both indexed and non-indexed government bonds during the period.

Almenni-Lífsverk also warned that rising oil prices following disruption to shipping routes through the Strait of Hormuz had added to market uncertainty and increased corporate costs globally.

Despite these challenges, Almenni-Lífsverk reiterated the importance of diversification for long-term investors, stating that its portfolios continue to emphasise broad asset and risk diversification.

---