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III pillar

LHV Täiendav Pensionifond

Active Management
10%
-10%
10%
10 year net yield
10%
-10%
10%
5 year net yield
10%
-10%
10%
3 year net yield
10%
-10%
10%
2 year net yield

Suitable if

  • you have medium risk tolerance,
  • you are aware of investment risks and wish to make long-term investments in a supplementary funded pension, with the aim of using the accumulated money tax-effectively after reaching retirement age.

Details for making a payment in the fund

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Number of units
Acquisition price
Unit NAV
Profit/loss %
Profit/loss €
Total value

Strategy
The fund makes significant investments in equity markets: to ensure maximum growth, the proportion of equity markets is kept close to 75% of the value of the fund’s assets. The proportion of equity markets may also be higher – up to 95% – or lower (in recent years close to 40%), if considered reasonable by the fund manager.

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Biggest investments

The data is presented as at 31.08.2023

Biggest investments
German Treasury Bill 18/10/239.32%
France Treasury Bill 29/11/20238.52%
ZKB Gold ETF3.81%
German Treasury Bill 17/01/243.70%
France Treasury Bill 24/01/20243.69%
EfTEN Real Estate Fund3.17%
Luminor 7.25% 16/01/20263.16%
iShares Gold Producers UCITS ETF3.11%
Lyxor EURO STOXX Banks DR UCITS2.86%
BNP Paribas 2.5% 31/03/20322.73%

Biggest investments in Estonia

Biggest investments in Estonia
Luminor 7.25% 16/01/20263.16%
East Capital Baltic Property Fund III2.31%
BIGBANK 7.5% 16/05/20322.30%

Asset Classes

The data is presented as at 31.08.2023.

Information about the fund

Information about the fund
Volume of the fund (as of 31.08.2023)26,698,039.51 €
Management companyLHV Varahaldus
DepositoryAS SEB Pank

Entry fee: 0%

Exit fee: 1%

Rate of the depository’s charge: 0.0444%

Management fee: 1%

Ongoing charges (inc management fee): 1.44%

Ongoing charges are based on expenses for the last calendar year, ie 2022. Ongoing charges may vary from year to year.

August 2023: We placed a bet on consumption growth in China

Kristo Oidermaa and Romet Enok, Fund Managers

Following a robust July, the month of August delivered relatively modest results in the stock markets. The US S&P 500 closed the month 1.8% lower when measured in dollars, while the Euro Stoxx 50, representing Europe, recorded a 3.8% decline when measured in euros. The emerging market index MSCI EM experienced a 6.4% drop during the month when measured in dollars. Among the major markets, China saw the most significant decline, falling by 9% in dollar terms over the month. The OMX Baltic Benchmark index, which represents the Baltics, declined by 2.9% in euros during the month.

In August, Eften Residential Fund made its entry into the residential rental real estate market in Latvia by acquiring a 12-story apartment building in Riga. The building comprises 102 one- and two-room apartments, which are scheduled for renovation to meet modern standards in alignment with ESG criteria. This marks the fourth investment for the fund, bringing the total number of rental apartments in the portfolio to 456, including a Vilnius rental building with 145 apartments that is set to be completed in early 2024. The demand for rental apartments remains strong, especially for smaller spaces, with wait lists forming.

We added Alibaba as a new position to our fund and strengthened our holdings in Stora Enso. Alibaba holds the dominant market share in e-commerce in China, and our investment is a bet on the continued growth of consumption in the country. The most significant contributors among our equity positions were our physical uranium position, Yellow Cake, which gained +7.16%, and Equinor, which gained +5.05%, thanks to the higher price of a barrel of oil. Our largest decliners were copper miners, with declines ranging from 6% to 8%, due to the drop in copper prices over the month. In addition, Siemens Healthineers saw an 11.5% decrease in value, primarily attributed to quarterly results falling short of expectations. Taking a broader perspective, given the current environment of higher interest rates, equity markets currently offer limited attractive long-term investment prospects. Our fund’s largest equity positions lie within the minerals sector, which offers favourable long-term opportunities due to structural underinvestment.

In the bond portfolio, Baltic Horizon implemented the first partial redemption of its bond. Furthermore, the company announced its intention to redeem nearly half of the bonds issued in May by the end of this year. This will result in additional yield for the fund in the form of an early redemption premium. As Euribor rises, the interest rate of the company’s bond also increases, meaning the fund is currently earning an interest income of almost 12% on the investment.

Another noteworthy development related to the bonds of local companies was the announcement by Bigbank of raising new capital through exceptionally long-term bonds. Compared to our previous investment in Bigbank bonds, these securities are in a weaker position, which strengthens our investment’s position.

July 2023: Stock markets continue their strong rise

Kristo Oidermaa and Romet Enok, Fund Managers

July was a very strong month for the stock markets, with emerging markets leading the gains. Over the month, the MSCI Emerging Markets index rose by 5.8% in dollar terms, and the Chinese stock market went up by as much as 9.3%. Among Western stock markets, the US S&P 500 index rose by 3.1% in dollar terms, while Europe’s Euro Stoxx 50 index rose by 1.7% in euro terms. Meanwhile, the OMX Baltic Benchmark index, which tracks the Baltic stock markets, concluded the month with a gain of 1.2%.

In July, the biggest contributors to equity positions were copper mining companies, rising by around 8% on increased copper prices, the European Banks Index Fund, which rose around 5%, and Valaris, which saw a hike of 20% on a rebound in oil prices, and uranium, which rose by around 6%. Meanwhile, the Metsa Corporation and DSV Panalpina incurred the biggest losses, dropping by 8% and 5% respectively, as quarterly results missed expectations.

Taking a broader perspective, given the current environment of higher interest rates, equity markets currently offer limited attractive long-term investment prospects. Our fund’s largest equity positions lie within the minerals sector, which might offer favourable long-term opportunities due to structural underinvestment.

In an expected move, the real estate company Baltic Horizon announced that it will begin to partially redeem bonds issued in May. The bonds currently carry an interest rate of around 11.25%, which is in step with Euribor. This gives the company incentive to reduce its debt burden and redeem the bonds in instalments.

June 2023: Rise driven by positions in minerals and European banks

Kristo Oidermaa and Romet Enok, Fund Managers

In June, global stock markets continued their upward trend, with all major markets experiencing positive growth. The US S&P 500 index saw a 6.5% increase in dollar terms, while Europe’s Euro Stoxx 50 index rose by 4.3%. Asian markets also displayed growth, with Japan’s stock market closing up 7.5% in yen terms and China’s stock market rising by 3.4%. The OMX Baltic Benchmark index, which tracks Baltic stock markets, concluded the month with a 0.3% increase.

Among equity positions, the European Banks Index Fund emerged as the largest contributor in June, experiencing a notable 9% increase over the month. Additionally, copper and oil showed gains ranging from 5% to 15% in value. On the other hand, gold and related companies incurred losses between 3% and 6%, primarily influenced by messages from central banks signalling continued interest rate hikes.

Taking a broader perspective, given the current environment of higher interest rates, equity markets currently offer limited attractive long-term investment prospects. Our fund’s largest equity positions lie within the minerals sector, where we believe there are favourable long-term opportunities due to structural underinvestment.

As a new addition to our bond portfolio, we included subordinated bonds issued by Šiaulių Bankas in Lithuania. Being the largest local bank in the market, Šiaulių Bankas has witnessed an increase in its market share and expanded its acquisition activities in recent years. Given the significant rise in bond interest rates, the bank will provide an annual interest rate of 10.75% over the next five years.

Dangerous patterns
Andres Viisemann, Head of LHV Pension Funds

July marked a positive month for the stock markets. The S&P 500, which represents the largest US companies, climbed 3.1% in dollar terms, finishing the month just 4.5% below the historic peak it attained on 3 January 2022. Similarly, the Stoxx50 index, encompassing 50 major European companies, achieved its highest level on record by the end of July, with a 1.7% increase over the month.

LHV Täiendav Pensionifond

Recipient
AS Pensionikeskus

Account
EE547700771002908125 - LHV Pank AS
EE961700017004379157 - Luminor Bank AS
EE141010220263146225 - SEB Pank AS
EE362200221067235244 - Swedbank AS

Explanation
30101119828, EE3600010294, IK:Your ID Code

Amount
Amount invested in euros.

Disbursements

Pension agreement

The state does not tax payments from the 3rd pension pillar if you have concluded an insurance contract under which regular pension payments will be made to you for the rest of your life.

See more at Pensionikeskus.ee

Resale of shares

After reaching the age of 55 (if you started making Pillar III contributions before 2021), but not before five years have elapsed from the initial investment, the income tax on disbursements is 10%. If you have joined the third pillar before 2021 and want to take out what you have collected before the age of 55, the income tax is 20%. Those who have joined the third pillar from 2021 can withdraw money from the third pillar at a more favorable income tax rate (10%) if there is less than 5 years until retirement age.

The third pillar savings can also be bequeathed

The heir can then decide what to do with the inherited assets—whether to transfer them to their pension account or to withdraw the amount in cash.
Income tax of 20% applies to cash withdrawals.

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