LD Discretionary, which is the largest investment fund within The Cost-of-Living Allowance Fund, delivered a positive return of 2.0% in the third quarter of 2025, Whilst the Holiday Allowance Fund recorded a return of 3.2%.
The solid increases in the third quarter build on the already strong results from the first half of 2025. Members with accrued cost-of-living allowance funds have thus achieved a total return of 4.4% as at 1 October, whilst members with accrued holiday allowance funds have achieved 5.5% These are excellent returns compared with balanced Danish investment funds with a similar risk profile.
All four main asset classes – equities, bonds, credit and private credit – made a positive contribution to the return. The largest contribution came from investments in global equities.
Returns driven by strong economic growth despite trade policy uncertainty
In the third quarter, the turmoil in the financial markets was tempered by new trade agreements between the US and major economies such as Europe and Japan. At the same time, economic performance exceeded expectations, and companies from both the US and Europe reported strong financial results. The trade tensions have therefore so far had a limited impact on economic growth and the financial markets.
Added to this were the first US interest rate cuts since December 2024, which provided further support to the markets and created particularly favourable conditions for risky assets such as shares and credit bonds.
Stable growth is still expected in the final quarter of the year
Although the stock markets are at record levels, the expectation remains that market trends will remain stable in the final quarter of the year. Several previous sources of uncertainty, including tariffs and legislative packages in the US, have now been resolved. Although new tariffs are still being introduced, they are nowhere near as extensive as before. Furthermore, forecasts point to continued moderate growth in the major economies; for example, growth of 1.8% is expected in the US, along with further interest rate cuts.
All in all, the fourth quarter looks set to bring reduced uncertainty and continued support for returns across asset classes – to the benefit of LD Pensions’ members who have saved up accrued cost-of-living allowance funds and accrued holiday allowance funds.
