Danish pension fund manager LD Funds has selected Canadian-owned London-based manager GuardCap to run a global equities mandate, it has announced
Kristoffer Birch, LD Funds’ head of equities, said: “We have lacked a manager who can give us exposure to quality companies with high growth and high earnings, which both perform well in growth environments with low interest rates as we have now - and at the same time can protect the portfolio in crises.”
GuardCap, which says it focuses solely on concentrated, bottom-up, strategies, was up against 33 other Danish and international asset managers in the EU procurement process, LD Funds said.
Birch said it had also found GuardCap compelling because it had integrated ESG analysis and active ownership into its stock analysis and selection.
The mandate award was the result of a tender launched in March, originally for an expected sum of DKK400m (€54m).
Even at that stage, LD Funds did not know exactly how much its external managers would be required to invest on its behalf, because one of the two pension funds it runs – the holiday allowances fund LD Feriemidler – depends on choices made by employers contributing the allowances.
However, since March, LD Funds’ operating environment has changed significantly, with parliament having voted to disburse two thirds of the DKK100m of holiday allowances now rather than on retirement, in order to combat economic effects of the pandemic.
LD Funds now manages DKK35bn in the mature fund, Lønmodtagernes Dyrtidsmidler, and DKK40bn in LD Feriemidler.
The Frederiksberg-based pensions manager said it now had only one more equities mandate left to award in the series of tenders it has been conducting over the last year.
Equities and alternatives weigh on PFA’s H1 return
Denmark’s biggest commercial pension provider PFA has said its overall return on investments for the first half of this year was dragged down by losses on equities and alternative investments, including real estate.
The pension fund reported a 3.4% investment loss for its market-rate pension clients and a 0.8% loss for those with average-rate products, with total assets for the parent company rising to DKK599bn from DKK593bn at the end of 2019.
Allan Polack, PFA’s group chief executive, said: “We have had a strong focus on limiting the negative return for customers, when the COVID-19 pandemic seriously shook the markets, and since then we have been part of the upturn, so the losses have largely been made up.”
PFA reported a total investment loss in absolute terms for the period of DKK2.2bn, with listed foreign equities ending with a negative 7.7% return after currency hedging and Danish listed equities returning -0.9%.
“The return on investment was primarily brought down by negative returns on shares and alternative investments, while there have been positive returns on interest-rate hedging,” the firm said in its report.
Real estate and alternatives ended the period with negative returns of 1.2% and 5.7% respectively, it said.
Polack said: “Having a negative return is never satisfactory. On the other hand, it has been an extreme situation and we must also be pleased that the financial markets recovered quickly.”
At the holding company level, PFA reported a rise in total assets to DKK721bn at the end of June from DKK688bn at the end of 2019.
PBU: 90% of members value responsible, sustainable investment
In a new survey Denmark’s Pædagogernes Pension (PBU) says that in a new survey, 90% of its members said it was important for their pension fund to be invested responsibly and sustainably.
The member-owned pension fund for education practitioners - mainly kindergarten staff - said the poll ranked child rights as the highest specific priority for members, with 33% putting the issue at the top of their list, followed by climate, with 16% of respondents giving that the highest priority.
Sune Schackenfeldt, PBU’s chief executive, said the fund was actively working for a global transition to an economy less dependent on fossil fuels - which focused on renewable energy and green technology - while simultaneously trying to create the best possible return for scheme members.
“It is therefore very positive that [members] share the social and climate ambitions we have,” he said.