Members’ savings have weathered a turbulent six months characterised by significant volatility, particularly in the equity markets. LD Discretionary, which is the largest investment fund at The Cost-of-Living Allowance Fund, had generated a return of 3.7% as at 22 June 2026, whilst the employees' holiday allowance fund had generated a return of 5.5%.
Savings have benefited in particular from a strong recovery in the stock markets.
Shares make a strong comeback after a turbulent spring
The equity markets were characterised by significant volatility in the first half of 2026. Following a difficult first quarter, during which global equities fell, the trend reversed. April was the best month for global equities since 2020, and the upturn continued in May, when the equity index reached new highs.
The US technology sector in particular drove the markets higher, buoyed by renewed optimism about the potential of artificial intelligence to boost productivity and earnings. The trend has also been positive outside the US. The broad European share index, the STOXX 600, and Japanese shares set new records, whilst several Asian markets also delivered strong returns.
This has been particularly positive for LD Pensions’ exposure to equities in developing countries and green investments.
Rising interest rates are putting pressure on bonds
The conflict in the Middle East has led to higher energy prices and rising inflationary pressures. As a result, several central banks have raised interest rates, and further rate rises are on the cards. Among other things, this caused the German 10-year yield to rise to its highest level since 2011.
Recently, however, interest rates on long-term bonds have fallen slightly again. This is partly due to the prospect of a resumption of traffic – including oil and gas – through the Strait of Hormuz, which is easing inflationary pressures.
Continued uncertainty despite solid returns
Uncertainty remains high. Although the first half of 2026 looks set to end with strong returns for LD Pensions’ members, the future remains uncertain.
Navigating an unpredictable market has become the norm. In LD Pensions, we therefore continue to manage our members’ funds with a long-term perspective and regularly adjust our portfolios.
