Staff overseeing the SCA pension fund are considering decreasing its exposure to equities as it searches for higher-yielding products.
Speaking at the Pension Fund Forum Sweden last month in Stockholm, Staffan Ifvarsson, head of pension investments, said low yields in the fixed income markets mean staff could tap into its equity assets to fund new investments. (The Pension Fund Forum is organised by GP’s parent company Incisive Media).
“One thing that I think drives the markets today as well, is what’s happening in the fixed income markets. You don’t get any yields in the fixed income markets. What we struggle with, we need to find somewhere to invest where we can get the yields,” Ifvarsson said.
The fund is generally looking for assets that will beat returns on government bonds.
He said real estate and infrastructure are “the obvious place to look for a pension fund” because the investments also serve as a hedge on inflation.
Separately, he told delegates staff are reconsidering their approach to regional equities and leaning towards more global mandates.
“Why should we just think about Asia and that position... why not think of the entire opportunity set? We think why not hire global managers and let them find the opportunities?” said Ifvarsson.
SCA, a global paper and consumer products company, has about $3bn in pension assets in schemes around the world.
Separately, speaking in the Pension Fund Forum Denmark, Henrik Olejasz Larsen, chief investment officer at Sampension, said the scheme planned to develop a core/satellite approach for its equities portfolio.
“We will carve out a large part of our public equity risk in a core portfolio, a very benchmark-near mandate managed at a very low cost. And we’ll supplement that with building blocks that will give us opportunities to invest in more specialised investment ideas,” he told delegates.
He said the pension fund also planned to look for market neutral, pure alpha strategies for the first time.
“The reason why we have used this is primarily to have a good overall value for the cost of owning our equity portfolio, but we also think it’s a good division of labour. We can get access to specialised skill by dividing alpha and beta skills,” added Larsen.
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