Danish pension company, Danica Pension, has reported negative returns across all of its risk profiles for the first nine months of 2022.

Over the first three-quarters of the year, the typical customer with Danica Balance Mix Medium Risk and 20 years to retirement had returns of -16.2 per cent after costs.

The return for Danica Balance without guarantee was between -12.8 per cent and -18.6 per cent, with the higher the risk, the greater the negative return.

Meanwhile, the average customer with Danica Balance Responsible Choice and 20 years to retirement saw returns of -16.7 per cent.

Danica noted that as there is a special focus on sustainability and responsibility in Danica Balance Responsible Choice, the composition of the investments in the individual funds is different from those in the ordinary Danica Balance.

In 2022, Offensive Responsible Choice produced slightly better returns than the regular Offensive, but Mix Responsible Choice and Defensive Responsible Choice have given lower returns than the corresponding funds in the regular Danica Balance.

This is due, among other things, to the fact that properties are not yet included in Danica Balance Responsible Choice, according to Danica.

Danica stated that, after a summer of falling interest rates and rising stock and bond process, “reality returned” in August and September, with the US Central Bank increasing the key interest rate and the central bank stating it was going to do whatever was necessary to bring inflation down.

"It set in motion renewed interest rate increases and share price falls, which have continued after the US central bank once again met in September and confirmed the strategy of tightening the interest rate screw,” said Danica Pension investment director, Poul Kobberup.

"The European Central Bank is undertaking the same exercise and also raised the European key interest rate by 0.75 per cent after the summer holidays.

“At the same time, Europe continues to struggle with very high energy prices, which increase costs for companies and consumers. It is therefore expected that Europe will end up in a recession, which means economic decline and increasing unemployment.

"It is our recommendation that you do not change your risk profile during unrest, as this could lead to you potentially not taking part in the upswing, which historically has always come in the wake of a bad period.”

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