LD Discretionary is LD’s largest investment fund, as the majority of LD’s members have all their savings invested in LD Discretionary. LD therefore commissions an independent external analysis of LD Discretionary’s performance once a year. The analysis is carried out by Spektrum Fondsmæglerselskab A/S (formerly Kirstein A/S).
Strong results for LD Discretionary
Overall, this year’s analysis shows that LD Discretionary is performing well in both the short and long term. Once again this year, LD Discretionary ranks at the top of the benchmark group over a 10-year period, and in 2017 it also delivered a respectable risk-adjusted return.
2017 was a year of significant variations in returns for the reference group in this analysis. The majority of the group achieved returns of between 4 and 8 per cent, and within this group, LD Discretionary is well above the midpoint with a return of 6.9 per cent.
LD Discretionary stands out
As can be seen, for example, from Spektrum’s analysis, LD invests differently from the benchmark group in many ways. This is due to LD’s focus on protecting savings and its shorter investment horizon.
In 2017, LD increased the proportion of credit investments by 5 percentage points at the expense of gilt-edged bonds, and by the end of 2017, credit investments accounted for almost a third of the portfolio. This factor in particular made a very positive contribution compared with the rest of the benchmark group, which had an allocation to credit bonds of approximately 19 per cent at the end of the year.
The benchmark group has reduced its exposure to gold-edged government and mortgage bonds to a greater extent than LD Discretionary. Conversely, the benchmark group has made alternative investments to a far greater extent than LD Discretionary. In this respect, LD’s strategy is markedly different, as LD does not wish to be tied down by investment commitments over a very long period. LD does not invest in new infrastructure projects or in property, as these are investments involving long-term risk and capital tied up for many years. In 2017, LD began building a portfolio of relatively liquid alternative credit investments that generate a regular cash flow.
Over the years, LD Discretionary’s equity investments have come to resemble those typical of the reference group in terms of the extent of exposure and geographical diversification. In 2017, LD introduced a strategy for managing its equity portfolio that places greater emphasis on risks. This has made an additional positive contribution on top of the otherwise strong equity returns in 2017.
LD Discretionary
Spectrum’s cost analysis also shows that LD Discretionary is cheaper than all the other companies in the reference group.
For a more detailed look at LD Discretionary’s results over the 1-, 3-, 5- and 10-year periods, the full analysis can be downloaded here:
Spectrum reference group analysis
Spectrum reference group analysis – summary
Background to the analysis
Spektrum’s annual analysis is based on a comparison in which LD Discretionary’s key figures for return, risk and costs are compared with pension products that are as similar as possible to LD Discretionary. The products have been selected by Spektrum and thus constitute a reference group for LD Discretionary.
About LD Discretionary
LD Discretionary is the main product for LD’s members and is a balanced market-rate product, with LD responsible for asset allocation, which is tailored to the members’ age profile and payout horizon.
