A positive investment result in November has offset the drops that happened in late summer and autumn, with pension savers at PFA on track for a positive investment return in 2023.

For a typical PFA pension customer, with its recommended profile C, the return for the year to date is 9.9 per cent. According to PFA's chief strategist, Tine Choi Danielsen, the positive return is due, among other things, to the fact that PFA has been good at adjusting its investment risk as the economic outlook has brightened.

November has historically been a good month for investment returns, a trend that continued for 2023 as it has taken the lead as the best return month this year so far. With this insight, PFA had adjusted its investment portfolio accordingly.

"We had turned up the investment risk a notch with the expectation that the central banks would put a stop to interest rate increases and that this decision would be well received by the financial markets. It happened, and therefore we had a really golden November on the stock markets. The major US stock index, the S&P 500 rose by 8.9 per cent, while the tech-heavy Nasdaq rose by 10.7 per cent, and the more industrial-heavy Dow Jones by 8.8 per cent.”

Choi Danielsen said this has more than offset the price drops that were seen in the late summer and autumn months, and everything indicates that 2023 will be a really good return year. She said this was a surprise because the year did not look all that bright when it began.

"It is jokingly said that the financial markets have predicted nine out of the last five recessions, so it is not unusual that there is more focus on what can go wrong than what can go well. Therefore, many may also have underestimated how robust both the job markets and the private savings levels have been this year. These are at least some of the factors that have helped to keep the economy going for the benefit of the financial markets," she explained.

Looking ahead, Choi Danielsen said that despite increased political uncertainty, she has a positive view of the markets in 2024, where, as before, there will also be a large focus on employment as well as inflation and interest rate developments.

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