Icelandic pension fund Brúar had a real return of -12.9 per cent in 2022, its annual report has revealed.

Brúar chair, Auður Kjartansdóttir, noted that the year was characterised by large-scale changes in the world’s economies.

She highlighted that all major stock markets fell during the year and few asset classes were spared from the uncertain conditions, leading to the negative return.

The pension fund’s 10-year real return remained positive at 3.4 per cent.

Its net investment income in 2022 was ISK -15.9bn and its operating costs were ISK 595m.

Brúar had 21,313 active members and 10,415 pensioners.

There were ISK 3bn of special additional contributions and pension value stood at ISK 10.2bn.

The pension fund’s net assets for pension payment were ISK 338.5bn.

“After a period of low interest rates and a lot of money printing, inflation took hold and grew rapidly during the year,” Kjartansdóttir commented.

“The central banks of the world have responded to the situation with rapid and large interest rate increases with corresponding effects on demand and asset prices.

“Bond yields on the main markets rose during the year, together with the risk premium of corporate bonds rising considerably.

“The real return of the fund was negative by 12.9 per cent during the year and the nominal return was negative by 4.7 per cent.

“That result is only illustrative of the past year. The pension fund is a long-term investor and has delivered a good return in the last few years with the exception of 2022.

“The average return over the last 10 years is 3.6 per cent, which is above the benchmark that pension funds set for themselves, but it is expected that pension funds will achieve a real return of 3.5 per cent per year on average.”

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