II pillar

LHV Pensionifond L
Active Management
10%
-10%
10%
10 year net yield
3
1
7
Risk level
29.81%
0%
100%
Invests into Estonia
101351
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 31.07.2020

Biggest investments
German Government 2.25% 04/09/214.21%
German Government 3.25% 04/07/214.09%
EfTEN Kinnisvarafond3.77%
iShares Gold Producers UCITS ETF3.26%
Riigi Kinnisvara 1.61% 09/06/273.24%
German Treasury Bill 14/04/20213.17%
France Government 3.75% 25/04/212.92%
France Government 25/05/212.77%
France Government 2.25% 25/10/222.61%
Luminor 1.5% 18/10/212.23%

Biggest investments in Estonia

Biggest investments in Estonia
EfTEN Kinnisvarafond3.77%
Riigi Kinnisvara 1.61% 09/06/273.24%
Luminor 1.5% 18/10/212.23%

Asset Classes

The data is presented as at 31.07.2020.

Information about the fund

Information about the fund
Volume of the fund (as of 31.07.2020)962,235,800.23 €
Management companyAS LHV Varahaldus
Equity in the fund3 159 616.79 units
Rate of the depository’s charge0,0564% (paid by LHV)
DepositoryAS SEB Pank

Entry fee: 0%

Exit fee: 0%

Management fee: 0.60%

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): 1.01%

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.

August 2020 – The private equity fund successfully sold its Baltic investment

Kristo Oidermaa and Romet Enok, Fund Managers

August was mostly positive for the world’s stock markets, and the stock market indices of almost all developed countries ended on the positive side.

The leader was again the US stock market, whose S&P 500 index rose by 7% in local currency during the month. The Japanese stock exchange, whose index rose by 6.6% in local currency, was a close second. However, due to the strengthening of the euro, the returns from both these stock markets remained lower when measured in euros (5.6% and 5.2%, respectively).

Among European countries, Finland and Germany gained the most with returns of 6.3% and 5.1%, respectively. In the Baltics, the Riga stock market index outperformed the others with a 5% rise. The Vilnius stock market index went up by 1%, while the Tallinn stock market was negative by -3.6%.

BPM Mezzanine Fund, a private equity fund in the Pension Fund L portfolio, sold its investment in DEAC, the leading data centre operator in the Baltics. The investment was made in 2016 to provide the company with capital to improve its technological infrastructure and partly to refinance its existing debt burden. The fund’s investors earned a decent return in almost four years.

The Lithuanian state energy enterprise Ignitis has announced its intention to hold an IPO, the details of which are yet to be announced. The scale of the planned investments in the Lithuanian energy sector explains the company’s need for additional capital. The fund invested in Ignitis bonds in May, when the company raised money using international ten-year bonds. Although the coupon payment on the bonds is only 2% per annum, the fund has earned more than 6% return on the investment in a few months thanks to the price rise.

Among our local investments, Coop Pank announced having received a relatively high Baa2 rating from Moody’s. An international rating helps banks to attract certain deposits as well as offer guarantee products. We invested in Coop Pank’s ten-year subordinated bonds about three years ago, quite at the beginning of the bank’s new business. During this period, the fund has earned a cumulative interest return of approximately 20% on the investment.

The dynamics of international bond markets had no clear direction in August. The highest-rated government bonds fell slightly, while lower-rated corporate bonds rose again in both Europe and the US.

July 2020 – Sale of holding in thermally modified wood manufacturer Thermory was finalised

Kristo Oidermaa and Romet Enok, Fund Managers

Global equity markets moved in different directions in July. While the stock exchanges of the US and emerging markets showed positive results, European stock exchanges mostly remained in the red.

The Euro Stoxx 50 Index, which brings together major European companies, fell by 1.6% in July with the United Kingdom, Spain and France suffering the biggest losses. The Finnish and Swedish equity markets showed positive returns, adding 2.7% and 2.6% respectively. The Japanese Nikkei Index, however, fell by a total of 5.4% in euro terms over the month.

Of the Baltic states, Vilnius stock exchange showed the best result with a 5.4% return, while the results of Riga and Tallinn stock exchanges were modest (0.5% and –0.2% respectively).

July saw the completion of a transaction that involved LHV Pension Fund L and private equity fund Livonia Partners, which is part of its portfolio, exiting the investment in the world’s leading thermally modified wood manufacturer Thermory. The company was bought by UG Investeeringud, whose owner Kristjan Rahu became known for the sale of district heating provider Utilitas to an Australian private equity fund. UG Investeeringud is a long-term owner who values strategic investments and organic growth of the company.

Over the course of July we sold all of the Estonian government bonds that we had subscribed to during the issue that took place a month earlier. In little over a month, the sharp rise in bond prices increased the return earned by LHV funds by approximately 2%.

These government bonds will yield interest of around 0.125% per year for the next ten years. Consequently, the price increase meant that the bonds could already be sold now for the same amount of profit we would have earned by gathering interest for the next ten years.

In other words, on our sales level, the future return of these bonds would have been close to zero if we had kept the bond until the maturity date. In contrast, the investment of LHV pension funds made outside the public market in the bonds of Riigi Kinnisvara AS will yield an annual interest of 1.61%.

We wish to take even better advantage of such facts in the future: we will use direct investments to offer pension savers investments with greater return, which can only be accessed by funds.

Overall, the month was good for bond markets with the general rule being “the poorer the credit quality, the better the return”. Thus the profit earned by investors ranged from a little over 1% for eurozone government bonds to over 4% for the bonds of companies with a very low rating located across the ocean in the United States. The price movements continue to be based mainly on central banks’ support measures.

June 2020 – Global equity market sentiment was positive

Kristo Oidermaa and Romet Enok, Fund Managers

The return of global equity markets continued to be mainly positive in June. Euro Stoxx 50, which brings together the 50 largest stock companies in the euro area, added 6.4% during the month, whereas the greatest return was shown by the German Stock Index, which was up by 6.2%. The return of the Japanese Nikkei index was somewhat lower: +1.9% in the local currency and 0.5% in euros. The MSCI Emerging Markets Index, however, added a total of 7% in June.

Once again, Baltic equity markets showed good performance. The Tallinn Stock Exchange index added 2.4% in June and Riga and Vilnius Stock Exchanges were both up by 2.2%.

The L Pension Fund portfolio includes Lithuanian private equity fund INVL Baltic Sea Growth Fund, which is mainly focused on investing in medium-sized Baltic enterprises. In June, the INVL Baltic Sea Growth Fund made an investment in Eco Baltia, the largest waste treatment facility in the Baltics. This is the third investment for the fund, which was established in 2018, and as a result, the fund acquired a majority stake in the company. Eco Baltia employs over 800 people. The company’s 2019 turnover reached almost 71 million euros, of which the recycling business unit accounted for over 60%.

We made a big new investment in the fund by subscribing to bonds issued by the Republic of Estonia when the state borrowed 1.5 billion euros for 10 years in the form of securities. Estonia’s debt burden continues to be much smaller compared with other countries, thanks to which the bond’s credit rating is very high.

However, compared with countries who have decades-long active relationships with investors, Estonia has to offer a little more attractive conditions to investors in order to raise money, as it is essentially a newcomer on the bond market. The security is also the perfect match for our current market expectations, in relation to which we are maintaining a low risk level.

Bond markets continued to rebound in June, but overall a large proportion of market segments remained in the red in the first half of the year. A clear exception in both the euro area and the United States is government bonds: an increase in their prices has always been a sign of problems for most companies. Unfortunately, this signal is currently incomplete: whilst government bonds are very popular, corporate securities are not showing a great decrease.

The price of gold rises as confidence tumbles
Andres Viisemann, Head of LHV Pension Funds

This year has been full of surprises and major changes in our daily lives and in the financial world, which should reflect the economic side of real life. Even in their wildest dreams, school children could not have imagined at the beginning of the year that almost all the schools in the world would be closed for months.