DENMARK - Industriens Pensions, the e3bn industry-wide pension fund, is planning to begin a search for a currency overlay manager shortly.
Jan-Ole Hansen, chief financial officer of the fund said: “We believe we can gain on currencies. We decided to hedge our positions because we wanted to use our risk budget better. We are now in a better position to bet on currencies.”
He added that the fund hoped to appoint the managers by autumn this year.
Meanwhile, the fund has appointed State Street Global Advisors to manage a US$40m Japanese equities mandate and Pareto to run a $100m high-yield corporate bonds mandate.
The Copenhagen-based fund said that with these appointments, the fund had completed its “circle of regional managers”.
Jansen said: “The fund’s investment philosophy is to increase its long-term yield on investments by following an investment strategy which focuses on high yield asset classes and correlated high risk. This more extensive exposure will at present primarily be through equities, corporate bonds and emerging markets bonds.
“The funds overall risk ratio will be reduced through diversification in different asset classes.”
The fund also plans to invest around 5% of its assets in private equity over the next few years. Currently the fund has around 2% and aims to reach 3% in the next year. The pension fund expects to make further commitments for a total of DKK 1bn ($165m) every year in the years ahead.
The fund has invested $35m in Nordic Mezzanine II, $10m in Industri Udvikling II, $9m in INCUBA Venture, $34m in Crown European Buyout Opportunities, $34m in EQT IV and $180m in Paul Capital VIII.
The fund has also decided to raise its equities allocation, which was reduced to 21% in 2002 from 36% in 2000. Currently, equities stand at around 30%.
Industriens Pensions recently appointed Invesco to run a $100m enhanced indexed equities mandate and also appointed Axa Rosenberg to manage a $35m US small and mid-cap brief.
The fund has around 36.4% in Danish nominal bonds, 11.9% in foreign nominal bonds, 7.2% in Danish index bonds, 5% in foreign high-yield corporate bonds, 4/9% in emerging market bonds, 8.8% in Danish listed equities, 21.7% in foreign listed equities, 2% private equity, 0.3% in real estate and 1.9% in cash.
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