In September 2021, almost 3 thousand investors began to independently invest their 2nd pillar pension money, a figure which rose to over 5 thousand at the beginning of this year. As many as 81% of PIK LPK users are active, that is, PIK is also an active option for their 2nd pillar, where the monthly contributions of the accumulated income flow. LHV’s market share in terms of active PIKs amounts to 79% of all Estonian PIKs. As of January this year, the top ten largest investments of LHV PIK users remained similar compared to previous periods, including Baltic companies, broad-based index funds, US tech giants and funds tracking major cryptocurrencies.
Among the holdings with the highest market value, PIK users’ two largest investments, LHV Group and the SXR8 index fund, which tracks the 500 largest companies in the United States, account for 9% and 6% of total stock volume PIK. respectively, although these two stocks together represent almost half of the market value of the ten largest holdings, or 43%. In addition to both stocks being popular choices for auto investing, the prominence of SXR8 in particular has been helped to grow by a significant increase in the price of a share of the fund both in 2023 and throughout PIK’s tenure on the market .
Among the shares of the Baltic Stock Exchange, Enefit Green, known as the popular share, is also in the top ten of the largest investments, the investment volume of which is slightly less than 6% of the total volume of PIK securities. Coop Pank is in seventh place in terms of popularity and its share has fallen slightly compared to a year ago, partly because in 2023 the company has lost almost a fifth of its market value. Collectively these three Baltic stocks account for as much as 46% of the total volume of the ten most popular stocks, although the share of Baltic stocks in the total volume of PIK stocks is significantly lower.
Among foreign stocks, broad-based index funds dominate LHV PIK users’ picks, led by SXR8, which tracks the 500 largest U.S. companies mentioned earlier. Cryptocurrency is also a popular tool among LHV PIK users, with which they hope to grow their Pillar II wealth. In this case, LHV PIK users mainly invest in the Bitcoin and Ethereum price tracking funds COINXBE and COINETHE, which together make up 4% of the total volume of securities in PIK accounts. Furthermore, PIK users separately invest in major technology giants, including Tesla and Microsoft, but rather prefer to reap the benefits of technological development through the broad index fund iShares NASDAQ-100 UCITS ETF, where US technology companies predominate.
In total, the 10 largest positions of LHV PIK users account for 37% of the total PIK volume, which is why the stocks mentioned have a significant impact on portfolio development.
Source: LHV
LHV PIK users keep a significant portion of their pension assets in cash, reaching 21% of the total PIK amount. It is true that this is a historically rather low level and significantly lower than at the beginning of 2023, when free money in accounts accounted for almost 30% of portfolios, but we cannot help but notice that due to such a high share of money free money, PIK users did not get the full amount last year, during a broad stock market rally. If it invested 100% in securities, the value of PIK LHV would now be much closer to one hundred million euros. However, at the beginning of January it amounts to 61 million euros.
Source: LHV
Investors who started using the retirement investment account in September 2021 have been able to manage their 2nd pillar assets independently for more than two years. During this period LHV PIK users experienced an average return of -7.0%, which can increasingly be attributed to the fact that opening first retirement investment accounts and making large redemptions declined in 2021 just as the markets were falling. reaching their historical highs. As time passes, time spent in the market begins to influence portfolio development to a greater extent, and as LHV PIK users keep part of their portfolio in cash, markets need to rise even more to reach the positive level. side with the return.
At the same time, the combined index of pension funds increased by 5.1%, which is 12.1 percentage points more than the portfolios of LHV PIK. Although the overall EPI index is dominated by pension funds, where safe bonds with low growth potential are more important, pension funds are always 100% invested and free money is generally not kept in the account for a long period .
Therefore, PIK LHVs’ lag behind pension funds is not due to poor stock selection, but to a significant portion of free money that does not generate returns during a rising market.
Source: LHV
2024-01-29 09:56:38
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