II pillar

LHV Pensionifond XL
Active Management • Aggressive Strategy
10%
-10%
10%
10 year net yield
3
1
7
Risk level
28.31%
0%
100%
Invests into Estonia
34559
Fund investors

Suitable if

  • you have more than 15 years left until retirement,
  • you are prepared to take above-average risks,
  • your aim is the long-term growth of your pension savings.
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Strategy

The Fund prefers foreign markets, more liquid and traded instruments on regulated markets when investing assets. The assets of the Fund may be invested in their entirety in equities, equity funds and other equity-like instruments. The Fund is allowed to borrow up to 10% of the Fund's assets value. The long-term preferred asset class of the fund is public equity investments.

Performance
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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 31.05.2020

Biggest investments
German Government 3.25% 04/07/215.02%
German Government 2.25% 04/09/214.93%
Xtrackers DAX UCITS ETF4.63%
iShares STOXX Europe 600 DE4.42%
EfTEN Kinnisvarafond3.24%
iShares Gold Producers UCITS ETF2.77%
iShares DAX EX2.74%
Riigi Kinnisvara 1.61% 09/06/272.68%
TRIGON - New Europe Fund D2.58%
Luminor 1.5% 18/10/212.38%

Biggest investments in Estonia

Biggest investments in Estonia
EfTEN Kinnisvarafond3.24%
Riigi Kinnisvara 1.61% 09/06/272.68%
Luminor 1.5% 18/10/212.38%

Asset Classes

The data is presented as at 31.05.2020.

Information about the fund

Information about the fund
Volume of the fund (as of 31.05.2020)202,617,516.62 €
Management companyAS LHV Varahaldus
Equity in the fund500 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): 0.98%

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.

May 2020 – Fund’s return benefitted from new equity investments

Kristo Oidermaa and Romet Enok, Fund Managers

Global equity markets continued to rebound in May and returns were positive on stock exchanges of developed countries as well as on most emerging markets. The Euro Stoxx 50 index, which brings together the largest stock companies in the euro area, added 4.7% during the month.

Finnish (6.9%) and German (6.7%) stock exchanges showed the best returns and LHV pension funds have also made large investments in the stock markets of both countries. The return of the Japanese Nikkei index was 8.3% in local currency and 5.9% in euros. The performance of MSCI Emerging Markets index turned out to be somewhat weaker, as the index gained only 0.6% in local currency. The upward trend also continued on Baltic stock exchanges, of which Tallinn Stock Exchange showed the best return at 5.7% growth. Vilnius stock exchange ended up showing a 3.8% return, followed by Riga stock exchange with 2.4%.

In May, the return of XL pension fund once again benefited from new stock exchange investments made in spring. Latin American e-commerce company MercadoLibre also achieved a very good return as its share price rose by 42.5% during the month. The shares of Swedish infrastructure company Sweco, which rose by 19.5%, and Danish hearing aid manufacturer GN Store Nord, which added 16.3% in showed a good performance as well. The share price of German industrial giant Siemens increased by 16.4% in May.

Bond markets also continued to recover. Prices in May generally followed the principle that the more high-risk the borrower, the more the price of their bonds increased. Markets are clearly dominated by the view that central banks will cover all risks for investors. Whether this turns out to be true will be revealed in the following quarters along with the impact of the recession on individual companies and states.

We also made a new large investment when Lithuanian national energy company Ignitis borrowed money for 10 years with an interest rate of slightly over 2%. Some borrowers who are raising new money must currently pay a premium that is larger than usual in order to attract investors and thus Ignitis’ bonds generated additional return for the fund in an amount almost equal to annual interest already by the end of the month.

April 2020 – Rate of return for the fund was supported by increasing the equity risk

Kristo Oidermaa and Romet Enok, Fund Managers

After a decline in February and March, the global stock markets began to recover rapidly in April, and the index MSCI World rose by 11.1% during the month. The good mood on the markets is mostly the result of record support measures promised by state governments. In Europe, the stock exchanges in Finland and Germany rose the most, with rates of return being 10.1% and 9.3%, respectively, in April. The value of Japanese Nikkei index rose by 6.7%, measured in local currency, and 7.9% in euros.

The global index of developing markets achieved a 9.3% outcome, whereas Asian stock exchanges were among the strongest. For example, the Chinese stock exchange index rose by 6.7% in a month.

Also, the Baltic stock markets have recovered well: the Vilnius stock index rose by 15% and the Tallinn and Riga stock exchanges offered a return of slightly above 11%. However; year-to-date, the Baltic stock markets still remain in the red, as is the case with all global markets.

A sound rate of return for pension fund XL was generated in April by the shares of companies mining mineral resources. For example, the shares of Agnico Eagle Mines and Barrick Gold appreciated 48.6% and 41.4%, respectively, over the month. The companies Freeport-McMoRan and KAZ Minerals, focussing on copper mining, provided a rate of return of 31.8% and 22.4%.

Also, the outcome of the pension fund was supported by e-trade companies MercadoLibre, from Latin America, and Rakuten, from Japan, the shares of which appreciated by 20.3% and 14.6%, respectively.

We took advantage of the increase in bond prices, by selling the subordinated bonds with extra-long maturity of Danske bank and Sampo bank. Despite the difficult times on financial markets, both investments guaranteed a nearly 10% rate of return during the 12–18-month suspension period.

The volume of the bond portfolio in the fund XL has dropped to the lowest level in recent years, as we have allocated more of the money in the fund to stock markets.

March 2020 – We sold bonds to seize the opportunities on stock markets

Kristo Oidermaa and Romet Enok, Fund Managers

In March, the global stock market decline continued due to the spread of the corona virus and the fear of an economic crisis and, as a result, the first quarter of 2020 was one of the weakest ever for global stock exchanges. The Euro Stoxx 50 Index, which includes the large enterprises of the Eurozone, lost 16.2% of its value in March and fell by a total of 25.3% throughout the first quarter.

At the same time, the stock exchange indices of the largest European countries fell by more than 10% in March, and by more than 20% in Southern Europe. The value of the Japanese stock market index declined in March by 10%, measured in euros, and in the first quarter by a total of 17.4%.

The stock index of developing markets was also hit hard, in which the greatest losses were carried by Latin American countries. The Chinese stock exchange endured rather well and declined only by 7.1% (in euros) in March. Stock markets in the Baltic Republics also continued to decline, with the Tallinn Stock Exchange dropping by a total of 20% in March. The Vilnius stock index dropped by 12.1% and the rate of return for the Riga Stock Exchange was –10.8%.

We took advantage of the declining markets to make new investments in the Nordic stock exchanges. For instance, we acquired shares of Valmet, KONE, and UPM-Kymmene on the Finnish Stock Exchange. Valmet is an industrial enterprise that produces solutions for cellulose and paper manufacturers as well as energy sector enterprises. The main business area of KONE is the production and maintenance of lifts and escalators. The company earn 40% of its revenue from China, 40% from Europe, and 20% from the United States. UPM-Kymmene has focused on the production of renewable materials and finding responsible solutions for the forest industry.

More things have happened in large bond markets in March than sometimes do over a period of five years. The spreading virus caused bond prices to drop and, what’s more important, even the world’s largest enterprises almost completely lost the opportunity to borrow any money.

Central banks intervened with measures that were essentially the same as those used during the crisis ten years ago, although they did so more vigorously and quickly this time: banks were offered support and, for the first time, loans were issued directly to enterprises. Nevertheless, at the end of the month the losses on the European and US corporate bond markets were still between 6% and 15%. On some markets, the rise of the last three years was wiped out all at once.

Although the measures employed by central banks helped to stop the price drop, the problem remains. The extremely low interest rates of the last decade have allowed many lower rated enterprises to become so indebted that, according to the latest assessment of the International Monetary Fund, around 40% of all enterprises may find themselves in default during the next crisis. This crisis has arrived.

As our monthly overviews have emphasised in recent years, we are mainly investing in high-rated and short-term bonds. Doing so has allowed us to avoid enterprises that have borrowed substantial sums of money as well as long-term bonds, which were hit in March.

Within a month we sold more than one-half of the fund’s bond investments, acquired shares, and prepared money for new investments. By the end of March, the majority of the remaining bonds portfolio (almost one-half) were the bonds of European Union governments and public sector companies.

Cheap credit leads into temptation
Andres Viisemann, Head of LHV Pension Funds

There is no doubt that we are living in extraordinary times. At the end of March, the economies of the world’s biggest countries were partly transferred to a special regime and many economic sectors were more or less shut down. Those who could do so worked from home, but not every product and service can be created and delivered to customers by virtual means.