Danish pension fund, the ATP Group, posted an eye-popping 26.9 per cent net return for its return-seeking investment portfolio in the first half of 2019.

This compares to a net return of 2.7 per cent that the fund saw for the first half of 2018 and a negative net return of 3.2 per cent for the year overall.

“We have achieved a highly satisfactory return for ATP’s members,” said Bo Foged, the fund’s chief executive officer. “Uncertainties regarding the development in both the interest and equities markets require, however, that we continue with disciplined risk management and portfolio construction. This is essential for our ability to also produce satisfactory results in the long term.”

The fund uses a strategy of risk diversification across four risk factors: equity, interest rate, inflation and other factors. “ATP’s long-term guideline allocates greater risk to the two major factors ‘equity factor’ (35 per cent) and ‘interest rate factor’ (35 per cent), while the ‘inflation factor’ and ‘other factors’ are less significant (15 per cent each),” the report said. “The total risk is less than the sum of risk for the four risk factors, since there is a significant diversification gain.”

The first half of the year’s stellar performance was a combination of exceptional returns from international and Danish equities, as well as both mortgage and government-backed bonds, the report said. As well, there were negative contributions from inflation-related instruments.

Among its bond holdings, the fund’s report noted that most of the extra boost came from American and European government bonds, pushed higher by lower interest rates in those jurisdictions.