LSR’s investment policies set out the main principles guiding the management and return of the funds’ assets at any given time and define target asset allocations for each division. They include, among other things, a review of the divisions’ position, future cash flows, risk management, and economic outlooks in Iceland and abroad.
In the investment policy of Division A, which is LSR’s main division with assets of just over ISK 1,300 billion at the end of last year, the target for 2026 is for equities to account for 58% of the division’s assets and bonds 42%. It is also assumed that the proportion of foreign assets will increase compared with the previous policy. The share of foreign-currency-denominated assets in the 2026 policy is 51%, and in the fund’s long-term policy it is assumed that this share will increase further in line with an increase in the statutory maximum for such assets.
The investment policy of Division B reflects the fact that the division’s assets, in a division that has been closed to new members since 1997, are declining rapidly. Emphasis is therefore placed on increasing liquid assets and assets with a short duration in Division B’s portfolio.
The investment policy for the Private Pension and Specified Private Pension is now published for the first time since the fund announced that the number of Private Pension investment plans would be reduced from four to two at the turn of the year. After that, LSR Private Pension will offer the two return plans, the Securities Plan and the Deposit Plan, and the portfolio of the Specified Private Pension will form part of the portfolio of the Securities Plan.
The investment policy of the Securities Plan also aligns with the investment policy of Division A, further increasing synergies and operational efficiency in LSR’s Private Pension division. It is therefore assumed that equities will account for 60% of the assets of the Securities Plan and bonds 40%, and the target is for the share of foreign assets to be 50% next year. The portfolio of the Deposit Plan is invested entirely in indexed and non-indexed deposit accounts, which minimizes fluctuations in returns.