II pillar

LHV Pensionifond L
Active Management
10%
-10%
10%
10 year net yield
3
1
7
Risk level
29.03%
0%
100%
Invests into Estonia
100765
Fund investors

Suitable if

  • you have more than 10 years left until retirement,
  • you have average risk tolerance,
  • your aim is the long-term growth of your pension savings.
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Strategy

The assets of the Fund are invested in various asset classes in both local and foreign markets. The Fund's assets may be invested extensively in unquoted instruments, which are primarily used for investing in securities issued by companies domiciled in the home market. The long-term preferred asset class of the fund is private equity investments.

Performance
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Current year
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The Fund's return is expressed as the net yield after deduction of all fees.

Biggest investments

The data is presented as at 31.01.2021

Biggest investments
German Government 2.25% 04/09/215.08%
France Government 3.25% 25/10/214.75%
German Government 3.25% 04/07/214.18%
EfTEN Kinnisvarafond3.72%
German Treasury Bill 14/04/20213.41%
France Government 3.75% 25/04/213.36%
iShares Gold Producers UCITS ETF3.08%
Riigi Kinnisvara 1.61% 09/06/273.06%
ZKB Gold ETF2.90%
France Government 2.25% 25/10/222.90%

Biggest investments in Estonia

Biggest investments in Estonia
EfTEN Kinnisvarafond3.72%
Riigi Kinnisvara 1.61% 09/06/273.06%
East Capital Baltic Property Fund III1.69%

Asset Classes

The data is presented as at 31.01.2021.

Information about the fund

Information about the fund
Volume of the fund (as of 31.01.2021)1,018,936,690.30 €
Management companyAS LHV Varahaldus
Equity in the fund2 000 000 units
Rate of the depository’s charge0,054% (paid by LHV)
DepositoryAS SEB Pank

Entry fee: 0%

Exit fee: 0%

Management fee: 0,576%

Success fee: 20% per annum on any increase in the fund's rate of return over the cumulative increase of Estonian social security pension contribution as of 31.08.2019.

Ongoing charges (inc management fee): 1.14%

The ongoing charges figure is an estimate based on the current management fee and the 2019 level of all other recognized costs. Ongoing charges may vary from year to year.

January 2021: pension funds sold two investments

Kristo Oidermaa and Romet Enok, Fund Managers

January was relatively calm on world stock markets after a strong end to 2020, and the main stock market indices moved slightly and in different directions. The Euro Stoxx 50 index, which tracks large European companies, fell by 1.9% during the month. The German stock exchange, for example, was among the biggest losers with -2.1%, while the Swedish and Finnish stock exchange indexes rose by 4% and 2.1%, respectively.

Measured in euros, the US market index S&P 500 fell by 0.4% during the month and the Japanese Nikkei index rose by 0.7%. However, the global index for emerging markets offered a strong yield of 3.8% measured in euros, largely due to a more than 8% rise in the Chinese stock market. The Baltic stock markets were also strong in January. Tallinn stock market yield was 6.9%, the Vilnius stock market index rose by 5.6% and the Riga stock market by 2.6%.

LHV pension funds sold a long-term investment in the Tallinn listed company Arco Vara. A total of approximately 1.3 million shares were acquired by Alarmo Kapital, which is related to the chairman of the supervisory board of Arco Vara. The shares sold accounted for more than 14% of the company’s share capital.

The pension funds also sold their investment in the copper mining company KAZ Minerals. Its management announced that it would buy out the company in the first half of 2021, after which the share price on the stock exchange moved well above the takeover price. The pension funds earned more than 150% on the investment.

Bond markets remained largely negative in the first month of the year in Europe, the United States and emerging markets. The decline was not sharp, but the US and especially German markets have been steadily declining since early November, when the results of the Pfizer/BionTech vaccine clinical trial became available. The movement of these two anchors has had a very wide-ranging impact on the markets.

Despite a slight fall in prices (and rising interest rates), sales of new securities continue to grow strongly: in January, for example, European countries borrowed a total of about 40% more than in January 2017. There is currently no alternative to borrowing to compensate for the reduced tax revenue.

We have refrained from acquiring high-risk bonds for the fund. Major local companies in the fund’s portfolio have so far reported expected or even higher-than-expected results.

December 2020: performance supported by greater equity risk taken in spring

Kristo Oidermaa and Romet Enok, Fund Managers

Although the Covid-19 pandemic caused a significant fall in stock markets around the world in the spring, stock markets were largely able to recover by the end of the year. The US S&P 500 and the Nasdaq index even reached new highs. Measured in euros, the Japanese Nikkei index and the MSCI Emerging Markets Index rose by 11.6% and 6.4% year-on-year, respectively.

By contrast, the Euro Stoxx 50, which reflects Europe’s largest companies, was 3.2% negative. The biggest losers were the Spanish, British and French stock markets, while both the Nordic and German stock markets showed good returns.

In the Baltics, the Vilnius stock market had the best result with 14.7%, the Riga stock market index rose by 9.7% and the return on the Tallinn stock market was 5%.

The good performance of LHV Pension Fund L in 2020 was largely supported by the investments made during the spring stock market downturn, when we acquired shares on the stock markets of the Nordic countries, Germany, the USA and other countries. For example, the US dental company Align Technology, the car accessories manufacturer Hella, the infrastructure consulting company Sweco and the Latin American e-commerce giant MercadoLibre yielded over 100% returns.

Last year, we also invested heavily in companies involved in gold mining and the Physical Gold Fund. In December, these investments accounted for more than 8% of the fund’s portfolio and earned a good return during the year.

We also added several international private equity funds to the pension fund portfolio, the results of which we will see in a few years. Of the local private equity funds, it is worth mentioning Livonia Partners, which sold its investment in the timber company Thermory. LHV pension funds had a stake in this company and earned a good return.

During the year, the pension funds acquired several commercial real estate properties: an office building on Tartu Road in Tallinn and stock-office buildings in Jüri, Rae Rural Municipality. We also made an investment in the rental apartment fund launched by EfTEN Capital.

In the international bond markets, we gradually reduced our risks throughout the year. When global financial markets began to fall sharply in February, we took advantage of having held a significant portion of the fund’s assets in short-term high-rated European bonds. We sold them in large quantities and instead acquired positions in the declined stock market.

When stock markets started to rise in the second half of the year, we sold many of our winter investments and invested in short-term German and French government bonds.

At the same time, we reduced the fund’s position in international bonds with a higher credit risk to almost zero. The sale of Sampo and Danske Bank bonds played a significant role here. We took advantage of the significant cheapening of financial sector stocks in Europe by the spring. That’s why we sold most of these bonds and bought stocks.

We also continued to work on local transactions, reaching an agreement on the financing of the new Peetri Centre, in Peetri Village near Tallinn. The company raised money from pension funds with two bonds, which yield a current return of 7% per year for the fund.

We also signed agreements to finance the expansion plans of the renewable energy company Sunly. The company plans to use the capital from pension funds to make large investments, and the interest rate of the investment is 8% per annum.

In return, the fund received an early repayment of the loan granted for the purchase of the online classifieds environment auto24. The successful investment of the Estonian private equity company BaltCap brought the fund a little over 20% return in the form of interest and premium payments over three years.

Although the overall performance of the European bond market can be considered good last year, its best-performing segment had a yield of just over 4%. As shown above, we can clearly use the capital of pension funds more productively by financing local businesses. We will continue to focus on this line of business this year.

November 2020: private equity investment portfolio supplemented

Kristo Oidermaa and Romet Enok, Fund Managers

November was extremely upbeat for the world’s stock markets, largely due to the good news from COVID-19 vaccine manufacturers. Europe was strongest in the developed world: the Euro Stoxx 50 index rose by as much as 18.1% during the month. Among the biggest winners were Spain, Italy and France with yields exceeding 20%.

The German stock market index rose by 15% and the Swedish and Finnish stock markets rose by more than 11%. The Japanese Nikkei index, measured in euros, rose 12.5% in November. In the Baltic countries, the Tallinn stock market followed the general market rise and its index rose by 10.2% over the month. The Vilnius stock market rose 3.9% while the Riga stock market index fell by 0.2%.

Two new funds will be added to the private equity investment portfolio of Pension Fund L, managed by the globally operating Dutch AlpInvest. The volume of assets managed by AlpInvest exceeds 37 billion euros. The new funds have different strategies. The AlpInvest Secondaries Fund focuses on private equity funds investing in North America and Europe that have been able to deliver strong historical returns. AlpInvest Co-Investment Fund has a similar regional focus, while the fund’s strategy is to invest directly in companies through minority interests. In other words, the fund receives less than a 50% stake in each company in which it invests, but investors are offered greater diversification.

In the bond portfolio, our only international stock market investment without a credit rating ended prematurely when the Danish-owned Lithuanian pig farm Idavang repaid its obligations ahead of schedule. We subscribed to the company’s bonds when they were issued in December 2017, and in exactly three years, the investment yielded approximately 21% for the fund.

At the same time, we reached an agreement on new investments in the Estonian renewable energy company Sunly. Once certain conditions are met, in the next few months LHV funds will subscribe to Sunly’s five-year bonds with an annual interest rate of 8%. As a producer of green energy, Sunly is growing in many directions. The long-term investment of our pension funds will help the company raise bank loans in order to implement large-scale investment plans.

More freedom means greater responsibility
Andres Viisemann, Head of LHV Pension Funds

The year started positively on the international stock markets, but sentiment changed in the second half of January and the gains of the first half of the month were given back. The MSCI World index that reflects the world’s largest stock markets ended -0.3% in euros. The largest US and European companies lost 0.4% and 0.8% of their value, respectively, measured in euros.