DENMARK - Arbejdsmarkedets Tillaegspension (ATP), the DKK256bn (E34bn) Danish pension fund, is considering an investment in hedge funds.
“We are going to look at places where we can get extra return and if it is possible to get that through hedge funds then we are going to invest in hedge funds,” said a source at the fund.
The board of ATP must approve the use of hedge funds and to date the fund is yet to make that application to the board. But the source added that the application for approval is expected to be put to the board in the near future.
Previously the fund was excluded from considering a hedge fund investment, but recent changes in legislation mean that it is now possible for ATP to invest in non-traditional investment vehicles such as hedge funds.
The source confirmed that ATP would invest via external managers in the short-term. “I do not see any alternative to using external managers for hedge funds,” he said.
The source added that the fund is also planning to further internationalise its real estate portfolio.
“We have only very limited investments in real estate outside Denmark and we do not have any direct investments. We will definitely increase the portion of international real estate through indirect investments,” he said.
ATP is also investigating the possibility of investing E500m in emerging market bonds with a decision expected by December 1 2001. The source added that the fund is also currently examining securities lending.The fund is also set to invest E3.3bn in private equity in three phases.
(1) Looking to invest from now until 2003 in fund of funds, particularly Scandinavia.
(2) From 2003 looking to invest in global funds in continental Europe, the UK and the US.
(3) Looking to invest later in direct placements and co-investments.ATP may also tender equities mandates worth up to $1bn following dissatisfaction with current managers. The fund had already expressed a separate interest in appointing a second Japanese equities manager – but this may not now happen.
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