Total Value of Pension Funds Decreased Drastically in the First Quarter, but Investments into Estonia Grew

In the first quarter of 2020, the total volume of investments made into Estonia by the pension funds increased to record highest level, being 14.19% of the total volume of funds, which is 0.93 percentage points higher than in the last quarter of 2019 and 0.07 percentage points higher than the previous highest total percentage of investments, which was recorded in the second quarter of 2019.

As of the end of the first quarter, the values of pension funds are in total 4.4 billion euros, of which 633.7 million euros has been invested into Estonia. In the first quarter of 2020, the total volume of pension funds decreased by comparison with the fourth quarter of 2019 by 292 million euros. At the same time, the volume of assets invested into Estonia grew by 2.9 million euros reaching 14.2 percent. The investments made by pension funds into Estonia have remained within 12–14 percent during the past two years.

Pension funds started to grow again in April

Chairman of the Board of Swedbank’s investment funds Kristjan Tamla commented that in the first quarter the volumes of pension funds fell all over the world and it is directly related to falling of prices on the world stock and bonds markets. “In April, the marked showed a significant recovery, due to which the volumes of pension funds started to grow again. For example, the volumes of Seedbank’s pension funds grew by almost 100 million euros,” he commented.

While commenting the stability of assets invested into Estonia, Tamla said that the Estonian investments of pension funds have mostly low liquidity and therefore the prices of such investments react to what is happening in the world and Estonian economy with a certain delay and it is one of the main reasons why the crisis did not have a great impact on the Estonian investment volumes during the first month.

Pension fund investments into Estonia are growing

LHV continues to be the one to invest the most into Estonia among the pension funds. 25.57 percent of their total investments has been invested into Estonia (growth as compared to the fourth quarter is 0.93 percentage points). It is followed by Swedbank with 12.29% (growth as compared to the fourth quarter is 1.2 percentage points), SEB 6.94% (decrease of 0.23 percentage points as compared to the fourth quarter) and Luminor 4.32% (growth as compared to the fourth quarter is 0.39 percentage points).

The Estonian Chamber of Commerce and Industry is monitoring and analysing investments of pension funds’ assets into Estonia since the beginning of the year 2016. Back then the pension funds had invested only 5.48 percent (147 million euros) of their assets into Estonia. The smallest total volume of investments was in the first quarter of 2017, forming only 5.01 percent. The highest growth numbers were recorded in the fourth quarter of 2017, when the growth of investments exceeded two percentage points. The positive trend started after the amendments of the laws with which the state alleviated the investment restrictions on pension funds.