II pillar

LHV Pensionifond L
Active Management
10%
-10%
10%
10 year net yield
3
1
7
Risk level
29.82%
0%
100%
Invests into Estonia
101911
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 31.10.2020

Biggest investments
German Government 3.25% 04/07/214.33%
German Government 2.25% 04/09/214.02%
EfTEN Kinnisvarafond3.79%
German Treasury Bill 14/04/20213.53%
iShares Gold Producers UCITS ETF3.52%
France Government 3.75% 25/04/213.49%
Riigi Kinnisvara 1.61% 09/06/273.17%
France Government 3.25% 25/10/213.01%
France Government 25/05/212.71%
France Government 2.25% 25/10/222.50%

Biggest investments in Estonia

Biggest investments in Estonia
EfTEN Kinnisvarafond3.79%
Riigi Kinnisvara 1.61% 09/06/273.17%
Luminor 1.5% 18/10/212.20%

Asset Classes

The data is presented as at 31.10.2020.

Information about the fund

Information about the fund
Volume of the fund (as of 30.10.2020)985,028,072.82 €
Management companyAS LHV Varahaldus
Equity in the fund2 000 000 units
Rate of the depository’s charge0,0552% (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.

October 2020 – Ignitis bonds outperformed equities

Kristo Oidermaa and Romet Enok, Fund Managers

As in September, the performance of the world stock markets was mainly negative in October. Largely due to the escalation of the second wave of the COVID-19 pandemic, the Euro Stoxx 50 index, which tracks large European companies, was hit hard, falling by as much as 7.3% over the month. The largest falls were the German and Swedish stock indexes with –9.4% and –6.1%, respectively. Japan’s Nikkei index dropped by 0.9% in local currency, but with an increase of 0.6% remained positive in euros.

Among emerging markets, predominantly Asian countries, led by China, were able to deliver positive yields, while Eastern Europe was in decline. At the same time, the Warsaw stock market index fell by as much as 14.1%. In the Baltics, the most pronounced change occurred on the Vilnius stock market, whose index fell by 4.3%. The Tallinn stock market rose 0.7% during the month and the value of the Riga market index remained almost unchanged.

Partners Group, a private equity firm in the portfolio of Pension Fund L, announced a new investment in October – a holding in Telepass, an electronic customs services company. Founded in Italy, Telepass provides services to more than 7 million customers in 14 European countries. Partners Group’s private equity fund started investing in 2019 and Telepass is the fund’s fifth transaction.

Although the IPO of the Lithuanian energy company Ignitis did not please investors, LHV’s pension fund clients managed to earn a positive return: the company’s long-term bonds acquired by the funds rose by about 2.5% during the month. Ignitis is now a publicly listed company that has strengthened its capital position and future prospects. As a result, Ignitis bonds have yielded a little over 10% for our pension funds in less than six months.

However, the outlook for public bond markets in general is still poor and LHV funds are therefore focusing on local investments. We expect to add new investments from this area to our portfolio soon.

September 2020 – We increased the position of gold miners

Kristo Oidermaa and Romet Enok, Fund Managers

After several consecutive months with an upward trend, global stock markets halted in September and most of the market indices fell. The US technology sector index Nasdaq Composite, which had been performing very well, was hit hard and fell 5.2% in dollars over the month. The MSCI World global stock index fell 1.5% in September and the Euro Stoxx 50 index, which covers Europe’s 50 largest listed companies, fell 2.3%.

Among the biggest losers were the Mediterranean countries, while the Stockholm stock market, for example, went up 3.6% in local currency. The Japanese Nikkei stock index rose 0.2% in yen and 2.4% in euros. In the Baltic countries, only the Riga stock market index yielded a positive result, rising by 0.5%. The Vilnius and Tallinn stock markets, on the other hand, fell by 0.9% and 1.4%, respectively, in September.

While the performance of Pension Fund L has so far been strongly supported by companies engaged in the extraction of gold and other mineral resources, inflation expectations eased in September and the shares of gold miners also came under pressure. For example, the value of one of the largest equity investments in the pension fund, Barrick Gold, decreased by 3.3% during the month. However, we believe that long-term negative real interest rates have come to stay, and that is why we have increased the position of the sector.

Like stock markets, lower-rated bond segments were also on the weak side last month. While the yield on government bonds remained positive in September, the smaller corporate bond market showed a loss of around 1%. Similarly, compared with the beginning of the year, the yield on the European lower-rated corporate bond market was negative by more than 3% by the end of September.

It is unlikely that the negative yield will remain an exception, as many parts of the bond market are extremely highly priced. A much more promising strategy, on the other hand, is to invest in companies whose securities are not traded on a stock exchange. In September, we again sold international bonds, the prices of which have reached such a high level after a long rise that any expected future yield is non-existent or negative. That is why we moved forward by putting together a number of over-the-counter investments.

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.

Calm before the storm
Andres Viisemann, Head of LHV Pension Funds

The largest international securities markets were relatively calm in September. The North American and Western European stock markets lost a small part of their summer gains during the month, while the value of Japanese listed companies even rose slightly.