Research company: PFA generates strong returns for its customers
New research from the investment research company Morningstar shows that PFA's returns perform very well both in a short-term and long-term perspective. Seen over a number of years, this can make a big difference for the individual customer. Here, PFA’s Group CFO explains how the return was generated and how it affects the customers.
PFA’s market rate product, PFA Plus, recently received a positive mention in a recognised research study published by the investment research company Morningstar.
The study ranks PFA among the top three out of nine large Danish pension companies – seen both over the first nine months of 2015 and a three-year period. Anders Damgaard, Group CFO at PFA and, among other things, responsible for PFA's investments, is very happy with the result that provides strong returns for customers with market rate plans in PFA.
“Our ambition is to create both short-term and long-term returns that rank among the best in the industry. And, this is exactly what we have achieved for the benefit of our customers. Returns between 3.4 and 5.9 per cent* seen over a nine-month period are quite good seen in the light of the current situation on the financial markets, and, when we also perform well in the long term, it adds up to a lot of money for our customers over the years,” Anders Damgaard says.
Morningstar’s research shows that PFA customers have received a return of 32.6 per cent over the last three years. This corresponds to approximately DKK 320,000 for a customer with savings that amount to DKK 1 million, a medium-risk profile in PFA Plus and 20 years until retirement**. According to the investment research company, PFA generated a return of 4.5 per cent during the first 9 months of 2015***.
Solid returns in volatile equity markets
Anders Damgaard emphasises that the results have been achieved despite the significant share market unrest that we have witnessed twice this year, which affected the main part of the market rate pensions. First, the financial crisis in Greece intensified in April, and then the Chinese share market plummeted in August, resulting in historic fluctuations on the global share markets.
“We saw significant drops in the share prices during August, which resulted in losses for all investors – including PFA. However, we had a good grip of the risk on the affected markets, and our investment mix meant that we did not face devastating losses. We have succeeded in looking after the profit that was generated during Q1,” Anders Damgaard explains.
Low interest rates ahead
Like our competitors, PFA is affected by the exceptionally low interest rates which characterise the investment markets. They make it less attractive to invest in bonds, which most market rate plans also include. As a supplement to bonds, PFA will, among other things, turn up the alternative investments, such as infrastructure and properties, the Group CFO says.
“We have a strong investment team, which has just been strengthened further with a view to alternative investments and managing more investments in-house. This will contribute to ensuring strong returns and low expenses also in future. However, we always have to be prepared for change, and, in the years to come, we will just like our competitors face challenges when it comes to generating returns, and especially when it comes to the return on bonds.”