- Advertisement -
- Advertisement -

Related

Danish Pension Provider Goes Solo – External Managers Judged Too Costly

Latest Report

- Advertisement -

Stockholm (Bloomberg/Hedgenordic) – The biggest commercial pension provider in Denmark has had enough of external funds and is instead using its own people to chase higher returns in alternative investments.

Allan Polack (pictured), the chief executive officer of PFA Pension in Copenhagen, recently told Bloomberg that relying on outside managers is “simply too costly” a model. He also says that some of the external firms had “become very, very demanding.”

Polack is the second executive running a major Danish fund to have spoken out on the subject recently. At Danske Bank A/S’s pension arm, Chief Investment Officer Anders Svennesen says he’s curbing the use of hedge funds.

Both men represent a pension system that is ranked the best in the world, based on country studies of funding adequacy. Insurers and pension funds are the largest customers of the asset management industry, according to the European Fund and Asset Management Association. Last year, their assets constituted 37 percent of the total net assets of investment funds held by euro-area investors.

About 23 percent of the $113 billion in assets that PFA holds are in alternative products such as infrastructure and wind farms. Polack says he wants to raise that figure to 30 percent over time in an effort to improve returns.

“We all know that we can’t really use the bond as an asset class now,” Polack said. “You can’t retire on” the returns that bonds provide. “It’s extremely low returns, so we are shifting into other kinds of asset classes.”

PFA has gradually built up its own expertise in alternative investments over the past three years and will lean on that to expand its holdings of the asset class.

Equities remain a lucrative investment, he said. Returns in the second quarter showed that “most companies are doing very well, full of optimism, so we are definitely not giving up on this,” Polack said. “However, we’re more cautious on the fixed- income market, and that’s why we shifted away from that.”

PFA has said it wants real estate to make up a much bigger chunk of its portfolio. It made its biggest investment in the property market in August, putting more than $1 billion in assets in Germany to expand its portfolio to more than $9 billion. The fund’s plan is to raise its exposure “significantly” through 2022.

PFA has gradually built up its own expertise in alternative investments over the past three years and will lean on that to expand its holdings of the asset class, Polack said.

“It’s true that you can see that some of the returns have come down,” Polack said. Still, PFA has a pipeline of acquisitions that it’s planning and which “looks okay,” he said. That’s in contrast to what could happen as central banks reverse a decade of easy money.

“We are just worried that quantitative easing has come to an end now: what will be the impact of that?” Polack said. “The last eight, nine years of monetary policy is one big experiment.”

Picture source (c): Borsen

Subscribe to HedgeBrev, HedgeNordic’s weekly newsletter, and never miss the latest news!

Our newsletter is sent once a week, every Friday.

HedgeNordic Editorial Team
HedgeNordic Editorial Team
This article was written, or published, by the HedgeNordic editorial team.

Latest Articles

Playing ‘Moneyball’ for Investors

Having managed the opportunistic hedge fund Pensum Global Opportunities under the Pensum Asset Management umbrella since 2022, Sector co-founder Peter Andersland has now established...

One Big Winner Lifts Accendo Into the Top Ten

When your portfolio holds six names, one big winner can move the needle in a major way. For Accendo Capital, September proved just that....

Slim Nordic Line-Up at HFM Awards

With Intelligence has revealed the shortlist for the HFM European Performance Awards 2025, featuring an unusually small number of Nordic hedge funds among this...

Record Gold, Rising Momentum

The NHX CTA Index gained in September 2025, supported by a broad-based trend environment. Most of the profits came from precious metals, as gold...

From Rocky Starts to Solid Returns and Milestones

Lynx Asset Management, best known for its flagship trend-following program Lynx, has in recent years expanded its product offering with the launch of Lynx...

Europe’s Infrastructure Transformation: Where the Smart Money is Going

Infrastructure is at the heart of Europe’s economic transformation. Richard Marshall, Head of Infrastructure Research at DWS, explores how subsectors like data centres, renewable...

Allocator Interviews

In-Depth: High Yield

Voices

Request for Proposal

- Advertisement -
HedgeNordic
Privacy Overview

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.