II pillar

LHV Pensionifond M
Active Management • Balanced Strategy
10%
-10%
10%
10 year net yield
2
1
7
Risk level
32.40%
0%
100%
Invests into Estonia
13684
Fund investors

Suitable if

  • you have 3–10 years left until retirement age,
  • you have moderate risk tolerance,
  • your aim is the long-term stable growth of your pension savings.
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Strategy
When investing in assets, the fund prefers cash-flow assets and, where possible, the local market, including less liquid private equity and real estate investments. The investments are predominantly in local currency and up to 75% of the fund's assets can be invested directly in equities. The fund's long-term preferred asset class is real estate 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 29.02.2020

Biggest investments
Luminor 1.5% 18/10/213.44%
EfTEN Kinnisvarafond3.28%
Riigi Kinnisvara 1.61% 09/06/272.79%
France Government 2.25% 25/10/222.34%
Berkshire Hathaway 0.25% 17/01/212.31%
JP Morgan 1.375% 16/09/212.12%
Transpordi Varahaldus 2.85% 18/04/252.09%
BNP Paribas 0.75% 11/11/221.81%
DT 03/04/201.79%
Tartu linn 25/10/321.75%

Biggest investments in Estonia

Biggest investments in Estonia
Luminor 1.5% 18/10/213.44%
EfTEN Kinnisvarafond3.28%
Riigi Kinnisvara 1.61% 09/06/272.79%

Asset Classes

The data is presented as at 29.02.2020.

Information about the fund

Information about the fund
Volume of the fund (as of 29.02.2020)136,365,694.51 €
Management companyAS LHV Varahaldus
Equity in the fund380 000 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): 0.84%

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.

February 2020 – We invested in the Peetri Centre

Romet Enok, Fund Manager

In February, global stock markets experienced a sharp decline, caused by fears of the spread of the coronavirus and the accompanying slowdown of economic growth. The index, which gathers together the 50 biggest publicly traded companies in the Eurozone, decreased by 8.5% over the month, with France and Germany being among the biggest losers. The Japanese stock exchange index dropped by 8%, measured in euros.

This time even the Baltic stock markets went along with the overall decline: The rate of return of the Vilnius Stock Exchange was −6.3% and the Tallinn Stock Exchange fell by 5.3% over the month. The decline of the Riga Stock Exchange was notably smaller at 2.7%.

Coop Pank published its financial results for its first year operating as a publicly traded company. Compared to 2018, the bank managed to increase its earned income by 20%, whereas interest income demonstrated the fastest growth. This was caused by growth in the bank’s loan portfolio of 40%, reaching more than EUR 460 million. The company’s net profit increased by 16.3% over the year, achieving a level of EUR 5.5 million.

As a local investment, we signed contracts to allocate EUR 8.5 million to the construction of the Peetri Centre, in Peetri, located on the outskirts of Tallinn. The new centre is home to a Võru Ühistu Coop, Medicum, a 24-7 Fitness and a tennis centre, and has already opened its doors. The investment by LHV pension funds was made for a period of five years, earns 7% interest, and is secured with the mortgages covering the centre’s real estate.

At the same time, we once again reduced the share of listed bonds, by selling Latvian government bonds. Given the climate of fear on the stock markets, the bond markets have currently attracted a lot of money. At the prices achieved in this way we will most likely sell more bonds soon and invest the money received into local projects or stock markets.

A considerable portion of the total assets of the fund have been placed in highly-rated short-term liquid bonds. Firstly, it protects against the current situation and secondly, it enables new investments to be made as soon as attractive possibilities occur.

January 2020 – LHV pension funds acquired the Valge Maja office building

Romet Enok, Fund Manager

2020 began with quite a negative tone on global stock markets, with the stock exchanges of both developed and developing countries remaining mainly in negative territory in January. The rate of return of the Euro Stoxx 50 Index, which combines the largest companies of the euro zone, came to -2,7%, while the stock markets of almost all major powers declined. Only the Finnish Stock Exchange was able to provide a surprise with its 2.2% rise. The stock markets of the Baltic Republics did not go along with the negative mood and the Tallinn Stock Exchange index rose by a total of 4.6%. The rate of return of the Vilnius Stock Exchange was 3.1%, and the Riga Stock Exchange rose by a modest 0.5%.

LHV pension funds made their second direct investment in commercial real estate in January, acquiring the Valge Maja office building, located along Tartu mnt, in Tallinn. The building was constructed in 1952, as the Marat textile factory, and was renovated into an office building in 2010. The building has more than 16,000 square metres of space available for lease. The largest tenants are IT sector companies, two sewing supplies shops, and a restaurant. The area is developing quickly, with Sossimägi and Keskturg soon set to receive a new look, and a new Hilton hotel being built nearby.

In January, one of the most successful company purchases in Estonia was finally completed when BaltCap and the management board of the company sold the auto24 environment to the international private capital company Apax. LHV’s pension funds were repaid the loans taken during the transaction to purchase the company: the funds earned 3% a year from the bonds, which were an alternative to a bank loan, and 12% from the capital loan. Prior to the final date of redemption, a premium was added which further increased the total return for pension collectors. Active pension funds offer such financing all over the world and in Estonia we can see the funds playing the same role in the future in terms of promoting the economy and earning income for savers.

Šiaulių bankas announced that they have concluded a contract in order to purchase a loan portfolio from the Lithuanian branch of Danske Bank. The 125 million euro portfolio, mainly consisting of home loans, is related to private banking clients. In order to finance its growth, Šiaulių issued subordinated bonds for LHV pension funds at the end of December in the amount of 20 millio euros and at an interest rate of 6.15%.

December 2019 – BaltiCap Fund planning on purchasing a Lithuanian meat processing company

Romet Enok, Fund Manager

At the end of December we reached an agreement with Šiaulių Bankas, the fourth largest bank in Lithuania, on the basis of which LHV’s pension funds invested in the company’s long-term bonds. The annual interest rate on the bonds is 6.15%, the final term is in ten years, and the bank reserves the right to repay these prior to the deadline in December 2024.

Šiaulių Bankas has since grown in such a manner that it serves 7-8% of the Lithuanian banking market. The bank’s biggest shareholder remains the European Bank for Reconstruction and Development (EBRD), which holds more than 25% of its shares. Long-term bonds help to fulfil the bank’s capital requirements, thereby allowing them to grow their loan portfolio.

Over the past few years we have made similar investments in the bonds of Coop Pank and Citadele Banka. By doing so we have created a new asset class in the funds; one that generates over 6% in interest annually.

A familiar trend continued on the global stock markets in December, which mainly left the stock markets of developed as well as developing countries in positive territory. The Euro Stoxx 50 stock index, which represents the 50 largest listed companies in the Eurozone, rose by 1.2% in December, with the best performance coming from the Helsinki Stock Exchange, which rose by 4.1%. The Japanese stock index rose during the month by 1.6% when measured in the local currency, but only by 0.3% when measured in euros.

December turned out to be an especially strong month for the stock markets of developing countries, with the MSCI Emerging Markets index rising by 7.2%. In comparison, the results for Baltic stock exchanges were more reserved: The Tallinn and Vilnius stock exchange indexes rose by 1.2% and 0.4%, respectively, while the Riga stock exchange fell by 0.8%.

The private capital fund BaltCap Private Equity Fund III, which is a part of the Pension Fund M portfolio, made its first investment in December. An agreement was concluded to purchase the Lithuanian meat processing company Krekenavos Agrofirma, which will be finalised after approval by the Competition Authority. The company is a market leader in Lithuania and also actively exports to foreign markets. BaltCap sees opportunities to support the growth and future development of the company, and by doing so increase the value of the company.

Stock markets sailed into unknown waters
Andres Viisemann, Head of LHV Pension Funds

While 2019 surpassed expectations in terms of corporate profits on stock markets, this year, profit growth may once again be disappointing. International trade was already at a standstill prior to the spread of the coronavirus, and even the global economy was expected to slow down to some extent.