Pension returns back on track after spring's tariff shock
PFA's customers have turned spring losses into solid returns, following strong performances from both American and European stocks. At the same time, the outlook for autumn appears promising, as the worst turbulence surrounding trade policy has subsided.
The past eight months have once again shown how quickly developments on the stock markets can change—and that it usually pays to remain calm when stock prices dip.
"A typical PFA customer with medium risk, 15 years to retirement, and one million kroner in their pension account would, over the past eight months, have seen a loss of 92,000 kroner in April turn into a gain of 46,000 kroner by early September. That is, of course, if they kept their cool and stuck to their investment profile," says Chief Strategist Tine Choi Danielsen.
The large fluctuations in returns are primarily due to turmoil in the U.S. stock markets, which were severely impacted in April by Trump's tariff threats.
"Although Trump's slogan was America First, it was American companies that suffered the largest losses when he announced his increased tariffs in April. These same companies have since benefited the most as he later eased the tariffs—largely in response to the negative developments in the financial markets," says Tine Choi Danielsen.
European stocks have had a strong year
According to the chief strategist, the rise in U.S. stocks is not only due to Trump moderating his tariff threats but also to a strong U.S. economy with healthy corporate earnings. At the same time, European stocks have also delivered strong results—and have actually contributed more than U.S. stocks for PFA customers, as gains from the U.S. have been negatively impacted by a declining dollar.
"U.S. stocks have certainly reached new highs, but the falling dollar has dampened returns for Danish investors. This has also affected returns at PFA, even though we increased our protection against dollar depreciation during the period, which has benefited our customers. On the other hand, there’s no downside when we look at European stocks, which have contributed significantly to savings with a return of 10.5 percent," says Tine Choi Danielsen.
She also adds that the strong European stock market returns have not come from the Danish C25 index, which has currently lost nearly 7 per cent.
An optimistic outlook for the remainder of 2025
As PFA invests customers' savings broadly in the global stock market, the local downturn has only had a limited negative impact. With strong return drivers in Japan, Europe, and the US, Tine Choi Danielsen remains largely optimistic when looking at the prospects for the rest of the year.
"It seems that the worst uncertainty surrounding trade policy has subsided, although some negative effects may still appear with a delay, such as higher inflation and lower employment. These are some of the factors we are currently focusing on, as they will be crucial in determining whether the U.S. Federal Reserve decides to lower interest rates later this autumn. If that happens, it could provide fresh momentum for the economy and, in turn, the stock markets," says Tine Choi Danielsen.
She also notes that the progress in equities in 2025 does not stand alone but builds on strong years in both 2023 and 2024. This means that the three-year returns for a typical PFA customer currently stand at around 30 percent.