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Unlisted investments exceed DKK100bn at Danish pension fund

Alternatives and property are a ‘central stabilising factor’ for long-term returns

Volatile markets have prompted the largest privately owned life insurance company in Denmark to invest more than DKK100bn (€13.38bn) in alternatives and properties to stabilise its returns.

PFA said it considers those asset classes as “central stabilising factors” to receive solid long-term returns in an investment environment of historically low interest rates and an increasingly insecure equity market.

As a result, the pension fund, with DKK576bn of assets under management, increased its exposure to property and alternatives to approximately 20% of PFA’s portfolio in recent years, equating to more than DKK100bn.

Shifting financial markets

Allan Polack, group chief executive of PFA, said: “The financial markets are changing radically, which makes it essential to adjust the customers savings mix to ensure strong long-term returns in the future.

“Previously, bonds were characterised by stable returns that helped create a solid financial basis for the customers’ savings. Now, unlisted investments possess many of the same characteristics.”

London office space

As part of its alternative investments, PFA has, for example, invested in Danish telecommunications company TDC Group, Danish financial services company Nykredit, US infrastructure company Interpark, as well as British offshore wind farm Walney Extension.

Its property investments are worth approximately DKK57bn, it said, including rental properties and student housing in Denmark, shared office spaces in London and joint laboratories in the US.

At present, 45% of PFA’s property investments are situated in Denmark and 55% outside Denmark.

“In coming years, we will focus more of our attention on other countries than Denmark, among these Europe, Asia and the US,” said Polack.

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