Danish pension company PFA has completed the transfer of more than DKK 40bn of assets under management to its new investment profiles, which include a higher allocation to equities.

The transfer, which took place over eight months from April to December, aims to increase PFA's long-term returns and strengthen its customers' financial security.

PFA said it benefited from strong tailwinds in the equity markets during the process.

The savings of around 700,000 customers were moved from its original investment profiles (A, B, C and D) to its three new profiles (low, medium and high).

PFA investment director, Kasper A. Lorenzen, said it was the biggest change to the provider’s market rate product since it launched 17 years ago.

"The new profiles, which generally have more equities, have been created to strengthen customers' returns in the long term, and it is fantastic to see that we have successfully completed the restructuring – both technically and in terms of returns," he said.

However, PFA acknowledged that a higher allocation to equities increases the volatility of the returns, citing this past spring when US President Donald Trump started a trade war at the same time as PFA’s new profiles launched.

"The timing could hardly have been more challenging. We began the transition at virtually the same time that Trump's trade war put pressure on the stock markets. It made our palms sweat, because even though pensions are about long-term investments, you still want to get off to a good start.

“However, Trump quickly withdrew the worst threats, the markets turned around, and the stock market dip meant that we could buy more cheaply. All in all, market developments have therefore been good for PFA's customers, who have benefited nicely from the strong stock market comeback since April," Lorenzen said.

Indeed, a PFA customer with medium risk and 15 years until retirement is expected to return around 10 per cent for 2025. Looking over the past three years, the return has been 40 per cent.

Lorenzen said: "We have been good at adjusting our equity risk to the major fluctuations that have occurred in the stock markets since the beginning of the year. At the same time, we have managed currency risk well and protected customers against the weakening of the dollar.

“This is important when, as a European investor, you want your profits paid out in Danish kroner or euros. Finally, we have maintained our investments in the large US technology companies, which have once again contributed significantly to the return.”

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