Choice of pension profile and mutual fund

A pension profile can consist of different proportions of shares and fixed-income securities, and it is important that you choose what is best for you.

When choosing a pension profile, it’s important to evaluate the proportion of equities. You should think about how much risk you want to take, your expectation of return and how many years it is until you retire. If you still have many years left, you are less exposed to fluctuations in the market as the risk of a high proportion of equities is distributed over a longer period of time. Experience tells us that the market overall will rise in the long run. Historically, stocks have provided a better return than fixed income securities, but also higher risk. Note that historical returns are no guarantee of future returns.

• Good diversification of investments, divided into several mutual funds and asset classes
• Automatic rebalancing; we adjust investments so that the composition of pension profiles is kept constant
• Downweighting – the risk is gradually reduced when you approach retirement age. You can also choose to turn off or change when the downweighting should start
• Flexibility – you can change risk profile or management style if your needs change

In DNB, we offer three different types of pension profiles, where the difference is mainly the management style of the underlying mutual funds.

Active management “Our experts select the companies they think produce the best return. In addition, invests in markets such as high-income bonds, commercial property, private equity and infrastructure.

Index management - passive management at low costs.

Green shift - investments with a clear sustainability theme, and with a particular focus on climate and the environment.

Reduced risk towards retirement age

For those with a pension profile, the proportion of shares is automatically reduced every quarter as you approach retirement age. This is called down-weighting. The money is thus less exposed to fluctuations in the market.

If you have chosen a fund yourself, you get no automatic reduction of risk in your pension savings. If you want automatic down-weighting, you can change to a pension profile. Changing funds in your portfolio can also contribute to risk reduction.

Historical returns are no guarantee of future returns. Future returns will depend, among other things, on market developments, the skill of the Portfolio Manager, the mutual fund’s risk, and the management costs. Returns may be negative as a result of mark-to-market losses.