II pillar

LHV Pensionifond XS
Active Management • Conservative Strategy
10%
-10%
10%
10 year net yield
2
1
7
Risk level
9.66%
0%
100%
Invests into Estonia
4974
Fund investors

Suitable if

  • you have less than 3 years left until retirement,
  • you have low risk tolerance,
  • your aim is to preserve your savings and avoid losses.
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Strategy

At least 90% of the Fund's assets are invested in investment grade bonds, money market instruments traded on a regulated market, deposits, shares or other assets of other investment funds investing mainly in the above assets and other assets. The money raised for retirement remains stable. The assets of the Fund are invested in compliance with the rating restrictions imposed on the conservative pension fund by law. The long-term preferred asset class of the fund is low-risk debt instruments.

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 31.05.2020

Biggest investments
France Government 25/05/217.75%
German Government 1.5% 04/09/223.88%
Temasek 0.5% 01/03/223.54%
Czech Republic 3.875% 24/05/223.51%
Riigi Kinnisvara 1.61% 09/06/273.27%
Slovakia 3.375% 15/11/243.16%
Ignitis Grupe 2% 21/05/302.89%
BNP Paribas 2.875% 24/10/222.67%
Transpordi Varahaldus 2.85% 18/04/252.64%
Bank of America 04/05/232.55%

Biggest investments in Estonia

Biggest investments in Estonia
Riigi Kinnisvara 1.61% 09/06/273.27%
Transpordi Varahaldus 2.85% 18/04/252.64%
Elering 0.875% 03/05/20232.05%

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)24,623,130.69 €
Management companyAS LHV Varahaldus
Equity in the fund110 000 units
Rate of the depository’s charge0,0564% (paid by LHV)
DepositoryAS SEB Pank

Entry fee: 0%

Exit fee: 0%

Management fee: 0.504%

Success fee: no commission

Ongoing charges (inc management fee): 0.61%

Ongoing charges are based on expenses for the last calendar year, ie 2019. Ongoing charges may vary from year to year.

May 2020 – We purchased bonds of Lithuanian energy company

Romet Enok, Fund Manager

Markets continued to recover from March lows, while a clear link could be detected in relation to the movement of bond prices: the more high-risk the borrower, the more the price of their bonds increased. Thus, lower-rated bonds offered better returns than high-rated bonds; the demand for unsecured bonds was greater than for secured bonds and the price of long-term bonds increased more than that of short-term bonds. Additionally, the organisation of new bond emissions on European markets progressed at a record speed in May.

The impact of this extremely deep recession on individual companies and states will be revealed in the coming quarters. The price increase in recent weeks can therefore be explained only by central banks announcing support measures in March and April. Whether borrowers’ solvency actually remains at an acceptable level is a risk that many investors are currently taking probably without thinking.

In May, we made a new large investment in the fund 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 – Central banks extended their supporting hand to the markets

Romet Enok, Fund Manager

Bond markets have recovered to varying degrees from their sharp decline in March. While in the United States, the bond prices of companies with stronger as well as weaker solvency have increased sharply as a result of the extremely aggressive measures taken by the Federal Reserve, in Europe price movements have been considerably more modest.

In addition to the problems facing enterprises, Italian government bond prices have once again gradually dropped. The Italian economy, which has barely recovered from the previous crises, is facing a huge budget deficit and investors are worried.

Fund XS made no new investments in April. Our focus is still on short-term and low-risk placements.

March 2020 – High-rated bonds protected the fund from an even greater decline

Romet Enok, Fund Manager

More things 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. For the fund, however, this did mean a loss of slightly more than 1% for the month.

As at the end of March, nearly 85% of the fund’s assets were comprised of deposits, European Union governments and state-owned enterprises, and other public sector enterprises with a very high rating. Bond markets are facing a tough time and we are ready to take and advantage of the emerging opportunities.

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.