Icelandic pension fund Almenna achieved positive returns in the first half of 2023 following a “difficult” year in 2022, its half-year report has revealed.

In the first half of this year, the nominal return in all Almenna’s portfolios was between 4.8 per cent and 5.7 per cent.

The returns of mixed investment funds, which invest in both bonds and equities, returned between 4.8 per cent and 4.9 per cent in H1 2023.

Almenna noted that mixed strategies had provided good returns in recent years, but 2022 was an exception with unfavourable developments for investors and declines in equity and bond markets.

While these factors still impacted returns in H1 2023, inflation had been brought down to some extent by rising interest rates, the pension fund said.

The nominal return of the General Pension Fund, which invests in equities and bonds, was around 5.3 per cent in the first half of the year.

However, Almenna noted that the General Pension Fund’s real return was “insignificant” due to high inflation.

The State Treasury portfolio return rose by 5.7 per cent, primarily due to an increase in the yield on index-linked bonds and a rise in the consumer price index, while the deposit portfolio, which invests primarily in fixed deposit accounts, rose by 5.4 per cent.

The return in the property portfolio was 5.3 per cent, with most of its investments in mortgage bonds, deposits, and short unindexed government bonds.

“There have been considerable fluctuations in the stock markets, both in Iceland and abroad,” Almenna stated.

“Domestic shares have fallen during the year, amounting to a decrease in the total index of the main list by 7.8 per cent in the first six months of the year.

“However, there has been a positive turnaround in most foreign stock markets this year.

“Expectations are that inflation in the country and in many countries abroad has peaked and will continue to decline, including as a result of interest rate increases.”

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