ATP, Denmark’s biggest pension fund, said net income in the first six months of the year declined 52 percent after profit from investments plunged.
Net income fell to 3.93 billion kroner ($660 million) from 8.13 billion kroner a year earlier, the Hilleroed, Denmark-based fund said today in an e-mail. Investment profit after tax declined to 4.44 billion kroner from 8.41 billion kroner.
ATP, whose Chief Executive Officer Lars Rohde will take over as Danish central bank governor in February, lost money on stock hedges -- bets designed to guard against market declines - - and its commodity portfolio slumped under falling oil prices. The fund’s investments in bonds and stocks returned about the same as respective general indexes.
“The European debt crisis continues unabated, and the first half of 2012 was generally marked by great financial market uncertainty,” Rohde said in a statement. “Low interest rates also present a challenge for a pension provider such as ATP.”
The fund’s portfolio of Danish and German government bonds returned 1 percent, ATP said. Benchmark Danish government bonds with maturities longer than one year gained 1.1 percent in the first six months of the year, including reinvested interest, according to EFFAS Indexes available on Bloomberg.
The fund, the biggest investor in Danish shares, got a return of 12.3 percent, or 1.68 billion kroner, on its Denmark stock portfolio, compared with a 12.5 percent advance in the all-share OMX Copenhagen Index in the period.
Gains in the stock portfolio were hurt by a 1.48 billion-krone loss on financial hedging instruments, while the commodity portfolio lost 700 million kroner after oil-indexed bonds gave a negative return of 9 percent, ATP said.