II pillar

LHV Pensionifond L
Active Management • Progressive Strategy
10%
-10%
10%
10 year net yield
3
1
7
Risk level
32.20%
0%
100%
Invests into Estonia
103060
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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Biggest investments

The data is presented as at 30.09.2019

Biggest investments
EfTEN Kinnisvarafond4.17%
Luminor 1.5% 18/10/213.80%
Riigi Kinnisvara 1.61% 09/06/273.54%
France Government 2.25% 25/10/222.93%
Latvia 2.625% 21/01/212.37%
JP Morgan Chase And Co 27/01/201.97%
East Capital Baltic Property Fund III1.92%
Siauliu Bankas 21/12/201.82%
Baltic Horizon Fund 4.25% 08/05/231.82%
China Development Bank 0.375% 16/11/211.69%

Biggest investments in Estonia

Biggest investments in Estonia
EfTEN Kinnisvarafond4.17%
Luminor 1.5% 18/10/213.80%
Riigi Kinnisvara 1.61% 09/06/273.54%

Asset Classes

The data is presented as at 30.09.2019.

Information about the fund

Information about the fund
Volume of the fund (as of 30.09.2019)882,843,909.41 €
Management companyAS LHV Varahaldus
Equity in the fund2 400 000 units
Rate of the depository’s charge0,0576% (paid by LHV)
DepositoryAS SEB Pank

Entry fee: 0%

Exit fee: 0%

Management fee: 0.72%

Ongoing charges (inc management fee): 1.58%

Ongoing charges are based on expenses for the last calendar year, ie 2018. Ongoing charges may vary from year to year.

October 2019 – The Fund’s first direct investment in real estate

Kristo Oidermaa, Fund Manager

October went by relatively calmly on the world’s stock markets, and exchange indexes showed predominantly positive rates of return. The rate of return of Euro Stoxx 50, an index that is made up of 50 of the largest listed companies in the euro area, was +1.1% in October; good results were also shown by the German stock exchange with an increase of 3.5%, and the Swedish stock exchange with a rate of return of 5.2%. At that, the British stock market index fell 2.2% due to Brexit-related tensions. The result of the Japanese stock exchange was a strong 5.4% in local currency; however, the rate of return remained at 3.2% in euros. In the Baltics, the Vilnius stock exchange showed the best rate of return with an increase of 1.6%; the Tallinn stock exchange also rose by 1.5% in October. The Riga stock exchange had to accept a 0.3% decline.

In October, LHV Pension Funds made their first direct investment in real estate: in cooperation with Lumi Capital, they purchased the office building known as the Skype Building, located at the TalTech scientific campus in Tallinn. The building includes 6,850 square metres of rentable office space, and the largest tenant is the Microsoft Estonia Development Centre. This building is in excellent condition, and with a strong tenant, it will ensure a stable cash flow for the pension funds, and offer an attractive rate of return.

In the bond portfolio, we finalised the purchase of securities from the issue of Ekspress Grupp that was mentioned in the previous monthly review. All bonds were issued to LHV funds; their annual interest rate is 6%; they will be redeemed after eight years, and have been issued supplementary security by the company’s chief shareholder. The company will use the funds raised with the issue for expansion.

Among foreign investments, the price increase of Danske’s subordinated long-term bonds is once again worth mentioning in October. Even though the fines and punishments to be imposed on the Danish bank are far from clear, investor confidence is recovering – the two Danske bonds that are in our portfolio have offered a 24%–25% rate of return this year. At the same time, all main European bond markets were on the negative side, falling slightly less than one per cent, on average. We work with local issuers and continue to see investment opportunities here.

September 2019 – New private equity investment

Kristo Oidermaa, Fund Manager

In global markets, September mainly had a positive rate of return and the stock exchanges of both developed and developing countries increased. The index that encompasses the 50 largest publicly traded companies in the Eurozone increased by 4.3% within a month and the largest increases were, for instance, the stock exchange indexes of Finland and Germany with rates of return of 4.9% and 4.1%, respectively. The Japanese stock exchange index demonstrated a 5.1% rate of return in its local currency, whereas in EUR the increase was 4.1%. The Baltic stock exchange indexes moved quite little in September: The Vilnius and Riga stock exchanges increased by 0.3% and 0.6%, respectively, and the rate of return for the Tallinn stock exchange was -0.9%.

In September, the Pension Fund L made a new investment in a global private equity fund Investindustrial VII, which focuses on company buyout transactions mainly in Southern Europe. Investindustrial was founded in 1990 and the company hires more than 60 investment professionals. The portfolios of their previous funds include companies such as Aston Martin, Sergio Rossi, Ducati, and a few other known names from different sectors.

In our bonds portfolio, we again sold Lithuanian and Latvian government bonds which have so far had a good rate of return but which could result in a minimal or negative profit if retained until the end with their current high price.

Regarding our bonds portfolio, in the beginning of October, we reached a deal with Ekspress Grupp, according to which the company shall borrow money from the fund in the form of bonds to finance its expansion plans. Eight-year bonds have been issued supplementary security by the company’s chief shareholder and the bonds shall have interest of 6% per year. We see that local companies are increasingly more interested in raising capital from pension funds, and negotiations with some future issuers regarding making an investment in the form of a bond, are reaching their final stage.

The main bond markets of Europe had a slight decline in September. Considering the high price level of the markets, we shall continue working with the goal to sell bonds with a high price on the European stock exchanges and invest the gained funds into local companies.

August 2019 – New private capital investment

Kristo Oidermaa, Fund Manager

Against the background of the economic slowdown and the US-China trade war, the world's stock markets showed a predominately negative rate of return again in August. The index of Euro Stoxx 50, which gathers 50 of the biggest publicly traded companies of the Eurozone, decreased by 1.1% in a month and, for example, the stock exchange indexes of Germany and Finland both decreased by 2.0%. The rate of return of the Japanese stock market was -3.8% in the local currency and -0.5% in euros. The index value of global developing markets also decreased by -3.9% in euros, the weakest ones being Latin American countries led by Argentina. The stock market of the Baltic states also followed the general decline in August. The stock indexes of Tallinn and Riga showed a -1.7% and -1.6% rate of return respectively, and the rate of return of the Vilnius stock exchange remained at -0.9%.

The pension fund L made a new investment in August into the private capital fund QS Club Fund II, which is led by the global asset management company Quilvest. The company was established in 1972 and together they manage more than USD 5 billion worth of assets. The new fund will be making investments into Northern American and Western European private companies, by using several different strategies of value creation.

In August, it was reported that the portal auto24, which belonged to the management board of the company and a local investor BaltCap, would be put up for sale. After the sale of auto24, it is likely that the new owner will prematurely repay the loans of the company to our funds. The investment made at the beginning of 2017 was the first significant money placement of the new wave after easing the national restrictions of the pension funds. LHV funds were then fully financing the company's purchase from the former Finnish owners. It was and still is one of the biggest local investments of LHV funds. The final rate of return of the investment depends on the deadline for repayment; by now the funds have earned interest of a little more than 16% from the given loan during the two and a half years that have passed.

The European bond market is looking forward to the central bank's September meeting in which investors wish to see the relaunch of the bond purchasing programme. The price levels in the markets are so high that in the case of a very high rating it will be possible for banks to borrow money from markets for ten years with a negative rating. We will continue to work with many Estonian companies and hope to have new investments soon, especially in this direction.

The euro of today must also serve the needs of tomorrow
Andres Viisemann, Head of LHV Pension Funds

All of the world’s largest stock markets remained slightly on the plus side in September. Measured in euros the S&P500 Index, which includes the largest US enterprises, rose by 2.5% last month, and the value of the Stoxx 600 Index, which reflects the well-being of Europe’s largest enterprises, rose by 3.6%.