II pillar

LHV Pensionifond XS
Active Management • Conservative Strategy
10%
-10%
10%
10 year net yield
2
1
7
Risk level
11.63%
0%
100%
Invests into Estonia
5100
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
We invest the money into the bonds of various governments and their affiliated organisations. They offer the greatest stability and the lowest risks. There is no stock market risk. The money accumulated for your pension remains stable.

Performance
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Biggest investments

The data is presented as at 31.07.2019

Biggest investments
France Government 1% 25/05/275.60%
German Government 1.5% 04/09/224.54%
Czech Republic 3.875% 24/05/224.19%
Temasek 0.5% 01/03/224.12%
Slovakia 3.375% 15/11/243.76%
Riigi Kinnisvara 1.61% 09/06/273.72%
Transpordi Varahaldus 2.85% 18/04/253.48%
USA TREASURY BILL 1.625% 31/08/192.94%
ALTUMG 1.3% 07/03/252.64%
Bank Gospodarstwa Krajow 1.375% 01/06/252.49%

Biggest investments in Estonia

Biggest investments in Estonia
Riigi Kinnisvara 1.61% 09/06/273.72%
Transpordi Varahaldus 2.85% 18/04/253.48%
Elering 0.875% 03/05/20232.41%

Asset Classes

The data is presented as at 31.07.2019.

Information about the fund

Information about the fund
Volume of the fund (as of 31.07.2019)21,515,975.79 €
Management companyAS LHV Varahaldus
Equity in the fund110 000 units
Rate of the depository’s charge0,0576% (paid by LHV)
DepositoryAS SEB Pank

Entry fee: 0%

Exit fee: 0%

Management fee: 0.576%

July 2019 – Central banks are pushing bond prices even higher

Romet Enok, Fund Manager

The central bank of the United States of America lowered interest rate for the first time since 2008. As the cycle is turning, the European Central Bank is expected to do the same soon. The slowdown in economic activity will further lower investors' expectations of interest rates. All of this would be a normal development if interest rates weren’t already at absurd levels.

Thus we faced a situation in August, where all German government bonds were trading with a negative expected yield – even those with a maturity of 30 years. Perhaps the most insane example comes from the neighbouring country of Austria, where the government bond maturing in 2117 (almost in 100 years) will offer a return of 0.75% per year.

In this situation, of course, the price of the fund’s investments also rose alongside the market (0.3%), but making new investments is becoming harder. Rather, the funds next step will more likely be selling longer term bonds as prices keep rising.

June 2019 – Bond market inclined towards borrowers

Romet Enok, Fund Manager

Bond markets throughout the world have clearly set course towards a major cooldown of the economy, expecting new support measures to be implemented by central banks. By the end of June, the expected rate of return of the German ten-year bond had reached the level of –0.3%. It has never before been so deeply in the red. Yet, the impact is much more broad-based: Portugal, which over the last decade has gone through several severe crises, is now getting a ten-year loan with an interest of 0.5%.

All this shows that the rate of return of the last 6 months has been very good on the markets; nevertheless, the forward-looking outlook is meagre. Thus, the rate of return of the European government bonds was 6% and that of corporate bonds 5.4% in the first quarter, while the average annual rate of return of the last 5 years was 3-4% for both.

Given this situation, we can in particular avoid risks and wait for the emergence of new attractive investment opportunities. At the moment, the market is strongly inclined towards those who want to take a loan: new bonds are being issued in record volumes and with extremely low interest. Especially considering the fact that bonds are sold in unprecedentedly large volumes, the range of interesting bonds opening up to investors will be probably wider than ever when the market falls. Until then, however, we will rather see as the next step the sale of positions, should the price increase continue.

May 2019 – We acquired bonds of a Latvian public financial company

Romet Enok, Fund Manager

In terms of new issues, we participated in another bond issue of the Latvian public finance company Altum. As the company belongs to the Latvian State and participates in the implementation of public policies, these bonds can be compared to government bonds. In doing so, a somewhat higher interest rate allows a long-term investor to earn more than while holding government bonds.

Meanwhile in the international bond market, the trend of increasing bonds that are expected to have a negative rate of return when held to the end, continued. For example, Germany's ten-year bond ended May with the price, from which a -0.2% annual rate of return is expected when held to the end.

Underestimated impact of new changes
Andres Viisemann, Head of LHV Pension Funds

July was notably more eventful on the securities markets than the monthly returns of stock indices and bonds might suggest. The first half of the month saw an upward trend on global stock markets, with the final days of the month yielding back some of that growth.