Iceland’s fourth-largest pension fund, Birta pension fund, has set out its investment policy for 2022, revealing that it is reducing its exposure to bonds.

The pension fund, which caters for carpenters, chefs, electricians, engineers, mechanics, plumbers and other tradespeople, said the investment policy was approved on 25 November and entered into force on 1 December 2021.

Although the pension fund’s investment policy is intended for the long term, it is reviewed annually by Birta’s board, taking into account market conditions and the main changes in the fund’s environment.

As a result of the review, it has reduced the ratio of government bonds and mortgage-backed bonds in the portfolio. This has been offset by an increase in the proportion of foreign equities, deposits, and specialised investments, such as domestic and foreign venture capital investments.

Minor changes were also made to the margin of error of the individual asset classes of the policy. However, the objectives of other asset classes of the policy, such as bonds of municipalities, credit institutions and companies were unchanged from the previous year. The target for domestic equities in the policy is also unchanged between years at 13.5 per cent.

The full results for 2021 are yet to be published but in 2020, reveal that the nominal return on the fund’s asset came to 12.54 per cent, equivalent to 8.75 per cent in real teams. In 2019, the real return on assets was 11.06 per cent. The average real return achieved by the Mutual Pension Division between 2015-2020 was 5.01 per cent and 5.53 per cent between 2010-2020.

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