SEB pension funds investing in Europe

In light of the recent events taken place in the global economy, we started the year by making smaller contributions to stock markets and riskier bond markets when it comes to investing pension assets. The European stock markets and corporate bond markets are displaying greater potential, as the actions of the European Central Bank continue to support the economy.

Global economy is unstable
This year’s expectations for global financial markets are more modest when compared to last year. Record low commodity prices and the central banks’ support measures should serve to stimulate purchasing power, possibly resulting in a slight acceleration in global economic growth, compared to last year. Still, mainly in the short-term perspective, the performance of the sectors dependent on commodity prices and its impact on the economy as a whole are creating uncertainty, which in conjunction with the plan by the United States to raise the dollar interest rates creates doubts about the prospects of both China as well as the developing markets dependent on oil price (e.g. Latin America). These reasons have led the financial markets to a state of decline at the beginning of the year.

Initially we will be making smaller contributions to asset classes with a higher risk level
In light of the recent events taken place in the global economy, we started the year by making smaller contributions to stock markets and riskier bond markets when it comes to investing pension assets. We prefer keeping our available assets in secure bonds, making it possible to increase the share of riskier investments when necessary. The European stock markets and corporate bond markets are displaying greater potential, as the actions of the European Central Bank continue to support the economy.

Funds with higher proportion in equities were more successful last year
Moods on the financial markets were varied at the end of last year. Developed stock markets, incl. Europe, were on the rise and the prices of government bonds were slightly in the black. The year was not so good for developing stock markets and bond markets with a higher risk level and commodities, with rates of return remaining predominantly negative.

Among SEB’s pension funds, the best results were demonstrated by the second pillar SEB Energetic Pension Fund and the SEB Progressive Pension Fund, with larger proportion of shares, and the third pillar SEB Active Pension Fund. Last year, SEB’s pension funds invested into assets with a higher risk level, which proved to be successful in the case of equities, where investments on the European stock market generated quite a lot of return for pension investors. In the asset class of bonds, however, the higher risk did not pay off, as the significant and unexpected fall in the oil price at the end of the year took the government bond prices of developing markets to the negative side. As a result, the year was also less successful for lower-risk pension funds.
We have lowered the number of allocations made to riskier bond markets, but still continue to consider their contribution to be important due to the notable improvement in the rate of return.
 

AS SEB Elu- ja Pensionikindlustus and AS SEB Pank mediate the pension funds of AS SEB Varahaldus. SEB pension funds are managed by AS SEB Varahaldus.

This information should in no case be construed as an investment consultation, investment recommendation, or any other investment service.

The rate of return on the fund in earlier periods or current history of activities constitute neither a promise nor an indication of the achievement of objectives for the rate of return on, or the activity of, the fund in future periods.

Investments made into the fund are always open to various risks which, when materialised, may adversely affect the value or liquidity of the investment, the rights of the investors in the fund and other similar aspects.

Before making an investment decision, please read carefully the terms and conditions of the public offer prospectus for the pension fund units, its simplified prospectus and any other information published about the fund, available on the Web site of the Pension Centre at http://www.pensionikeskus.ee/?id=1737 or, concerning SEB products, on the SEB Web site at www.seb.ee. If needed, consult a representative of AS SEB Pank or AS SEB Elu- ja Pensionikindlustus.