Monthly report for February

The YTD return in P+ Balance was 2.6 percent at 28 February which is a 0.7 percent increase compared to the end of January. 

The month's portfolio returns accounted for 0 percent for equities, 1.6 percent for special investments, 0.4 percent for credit bonds, 1.2 for real assets and 0.7 percent for bonds. 

After a strong start to the investment year in January, the returns were slightly more subdued in February, however still positive across the pension fund's asset classes. Following the inauguration of Donald Trump as the US president at the end of January, the market was largely focused on his announcements. Thus, February was largely focused on the news flow where Trump repeatedly predicted new tariffs on various countries and sectors. In Europe, focus was on whether Trump's approach to ending the war in Ukraine would be more on Russia's terms than previously assumed. Combined with a somewhat poor mix of economic indicators pointing to weaker growth, but higher inflation, the market sentiment turned mid-February, and the last week especially the US equity market started declining. 

The US economic indicators were more mixed in February with a number of growth indicators being a little weaker than expected, while inflation was slightly higher. As the impact of Donald Trump's initiatives will not show until later, the market focused on softer data points, including a number of surveys which in several cases indicated growing concern for the economy. Europe did not see any sigificant change in the economic indicators, and the market still expects a number of interest rate cuts from the ECB. In Europe, focus was on the contrary on the German election and the possible impacts on the German fiscal policy as well as the possible impacts on the European economy as a consequence of Trump's initiatives. 

Overall, most asset classes generated solid returns in February, but the rapid shift in market sentiment during the month confirmed once again that we must expect more market volatility in 2025.