Stockholm (HedgeNordic) – Henrik Gade Jepsen is taking on the role of Chief Investment Officer at Sweden’s biggest pension fund, Alecta, to replace outgoing CIO Hans Sterte. Jepsen previously served as the CIO of Danish pension fund ATP before fulfilling the role of Head of Asset Management at Danske Bank for three and a half years until early 2020.
“This is a fantastic opportunity for me and I am really thrilled to join Alecta, one of the largest pension funds in Europe,” Jepsen tells HedgeNordic about his appointment as CIO. “Perhaps the most relevant experience to my future position at Alecta is the 17 years I spent at ATP, where in the last five and a half years I served as the Chief Investment Officer,” he continues. “I am extremely motivated by the fact that Alecta is providing and will be providing retirement income for about two and a half million people in Sweden. For me, this is an extremely challenging and motivating journey, exactly the kind of job I was looking forward to.”
“This is a fantastic opportunity for me and I am really thrilled to join Alecta, one of the largest pension funds in Europe.”
“I am very happy that Henrik is starting as the new head of Alecta’s asset management,” comments Magnus Billing, the CEO of Alecta. “His experience as a leader and deep knowledge in asset management will be very valuable for Alecta and for the execution of our mission.”
Jepsen most recently served as a senior advisor at Qblue Balanced, an alternative investment fund manager founded by Bjarne Graven Larsen, also a former CIO at ATP. Larsen co-founded Qblue Balanced with a six-member team mostly comprised of former investment professionals from ATP. Jepsen will assume his new role at Alecta on December 1 amid a difficult environment for institutional investors and other financial market participants.
Market Environment and Alternatives
“We have great uncertainty about the global economy, which comes after many years of strong headwinds to most financial assets. We are in a situation now where the movie is being played backward with monetary policy being tightened and inflation hitting again for the first time in decades,” Jepsen comments on the current market conditions. “I am not going to judge where this ends, but the uncertainty and potential outcomes for financial markets are much, much wider than what we have seen for many years when the best strategy was to load up on the most risky assets. You cannot be sure the same approach is a winning strategy going forward.”
“As a consequence of policy choices made over the last decade until rates started being raised recently, we reached a point where valuations of most asset classes such as bonds, credit, equities, alternative assets and so on had become very rich,” Jepsen tells HedgeNordic. “Valuations have become so rich that there is a very high likelihood that we will see much lower average returns over the next five or ten years than we did in the previous ten years,” he elaborates. “Investors not only have to deal with greater uncertainty, but they will also probably have to deal with lower returns than they have been used to.”
“Alecta is already moving down that road, towards diversifying more into alternatives.”
The long-term focus of institutional investors such as Alecta opens the door to private markets and alternative assets, where opportunities exist for better returns with lower volatility albeit at the expense of limited liquidity. Alecta has been on a journey to increase exposure to alternative assets, which already exceeded 20 percent as a share of its overall portfolio. “Alecta is already moving down that road, towards diversifying more into alternatives,” says Jepsen. “I think that’s a wise choice in my opinion.” In addition to the challenge of solving the asset allocation puzzle, another area of focus for the incoming CIO will be ESG. “While Nordic investors have been at the forefront in embracing ESG investing, there is a lot more work to be done in this area and all investors need to be fully dedicated because things are moving so quickly.”