06.01.2026
The year 2025 was turbulent in day-to-day politics, the economy, and markets alike. The new U.S. trade regime and higher tariffs seriously rattled markets in April, but this was followed by a rapid recovery. As a result, the impact on real economies was smaller than expected. The year 2025 will also be characterised by a significant weakening of the U.S. dollar against the euro and by the fact that, despite the rise of AI, we saw for the first time in several years that most major equity markets delivered stronger results than the U.S. markets. Instead of the continued and somewhat expected rise in crypto assets, we witnessed the price of physical gold climbing to record highs.
For LHV pension funds, the volatile and change-filled year proved very successful. In both the II and III pillars, the funds with the highest rates of return were LHV’s actively managed funds. In addition to equity markets, strong performance was supported by investments in real estate, local bonds, and – of particular note in 2025 – positions linked to precious metals, including gold. Currency risk between the dollar and the euro was hedged using derivatives, which meant that the weakening of the dollar did not affect the results of LHV’s actively managed funds.
In addition to leading in absolute terms, LHV pension funds also delivered the best results in other categories. LHV Pensionifond Indeks, which has a significantly higher allocation to emerging markets compared to other index funds on the market, achieved the highest rate of return among passively managed funds. LHV Pensionifond Rahulik also clearly outperformed all other funds with a conservative investment strategy.
In 2025, LHV Pensionifond Julge achieved a rate of return of 16.6%, Pensionifond Ettevõtlik had a rate of return 13.3%, and Pensionifond Tasakaalukas ended the year with a rate of return of 9.5%. LHV Pensionifond Indeks posted a rate of return of 11.4%. Across the market as a whole, the four highest-performing II pillar funds were all LHV funds. LHV Pensionifond Rahulik delivered a rate of return of 5.5%, clearly the best result among conservative funds. Similarly to the II pillar, the top two II pillar funds were also from LHV – Pensionifond Aktiivne III rose by 17.6% over the year and Pensionifond Indeks III by 11.3%.
When converted into euros, this means that purely as a result of rates of return, the assets of LHV pension fund customers grew by EUR 180.6 million in 2025. In addition, the volume of the III pillar assets saw a record annual increase of nearly EUR 32 million, and once again the number of people choosing to increase their II pillar contributions rose this year. This allows us to say that, despite the pension reform that took place five years ago, the average customer who has continued saving has never been in such a strong position to build future financial security.
LHV’s larger actively managed pension funds also have a clear business objective aligned with customers’ interests – achieving the highest possible rates of return – through the earning of a performance fee. The right to charge a performance fee is granted by outperforming the benchmark index over the long term. The benchmark is the growth of inflows from the pension insurance portion of social tax, essentially a function of wage growth and employment, both of which have been strong in recent years. Based on 2025 results, Pensionifond Julge earned the right to a performance fee and LHV Varahaldus received an additional EUR 2,098,909.73 in performance fees. In the coming years, LHV will continue striving for the highest possible rates of return so that, in addition to Pensionifond Julge, Pensionifond Ettevõtlik will also soon surpass the threshold required to charge a performance fee. Our measure of success is a high rate of return over the long term, and our primary goal is to grow LHV customers’ pension assets through effective management and prudent risk control.
At the core of LHV’s actively managed funds strategy is diversification across different asset classes. We believe that by including not only equities but also private equity and venture capital, precious metals, bonds, and real estate in the portfolio, it is possible to achieve strong rates of return without compromise while significantly reducing the risk of short-term volatility. This is because not all of these risk assets move in the same direction at the same time. We have found that this strategy is highly effective in supporting the long-term growth of our clients’ assets.
Vahur Vallistu, Chairman of the Management Board of LHV Asset Management
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