Denmark’s statutory pension fund ATP suffered an investment loss of DKK -0.1bn in 2024, accounting for 20 per cent of total assets.

The country’s pension giant blamed interest rate hikes in the fourth quarter, particularly in the US, for the “decisive impact” on the return of its investment portfolio.

ATP said it aims for a balanced and diversified spread of investment risk, with investment in both equities and bonds. The pension fund admitted that its investment return is “below” what is expected for an average year, based on the investment strategy it follows.

Commenting, ATP CEO, Martin Præstegaard, said: "We are exposed to bonds in our investment portfolio. For this reason, we were affected by interest rate increases, especially in the US, which resulted in a negative return. Although it was a good year overall for equities, the interest rate development in 2024 is the fundamental reason why we ended the year with a negative return.”

Calculated after expenses, the 2024 result in the investment portfolio corresponds to 0.6 per cent compared to the bonus potential.

In 2024, the largest positive contributions came from investments in listed foreign and Danish equities, which contributed returns of DKK 7.5bn and DKK 2.2bn, respectively. However, negative contributions came from government and mortgage bonds with a return of DKK -9.2bn and private equity with a return of DKK -2.9bn.

"Due to our risk diversification, our returns risk periodically being negatively impacted, even if individual asset classes seen separately yield higher returns. That is the case right now, with single stocks making a huge difference for investors. As a long-term investor and guaranteed pension provider, we fundamentally believe in balanced risk diversification, and 2024 will not change that," Præstegaard explained.

Looking over the longer term, ATP has generated a return of DKK 11.6bn over a 10-year period. It said that as a long-term investor, it is “concerned” with these longer-term results, over a 10-, 20- and 30-year time frame, as its “obligations to Danes are lifelong and guaranteed pensions”.

Despite a few challenging years, over the past 10 years, ATP has generated an average annual investment return of DKK 11.6bn, corresponding to 9.4 per cent in relation to the bonus potential in all years.

Furthermore, it also stated that its interest rate hedging strategy “worked as intended throughout 2024” as even without a positive result, the year ended with a bonus capacity at the same level as after 2023.

ATP said its bonus capacity — which shows the relationship between its bonus potential (free funds) and liabilities to members — is a good indication of its health.

This has remained stable between 15-20 per cent over the past 10 years, regardless of the size of the investment result and interest rate movements. At the end of 2024, the bonus ratio was 17.1 per cent – the same as for 2023

Furthermore, ATP’s administration activity expenses in 2024 totalled DKK 37 per member, or 0.03 per cent of the aggregate assets. The total APR for 2024 was 0.32 per cent, which is low in both a Danish and international context.

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