Icelandic occupational pension fund Birta, the country’s fourth largest, has laid out its investment policy for 2022 which shows a shift in some allocations towards equities and away from bonds.
This follows the publication of new annual policies from other Icelandic pension funds revealing a similar shift in investment priorities.
Birta announced that the main changes in the investment policy for 2022 compared to that of the previous year included a reduction in the proportion of government bonds and mortgage-backed bonds, which was being offset by an increase in the proportion of foreign equities, deposits and specialist investments – which includes domestic and foreign venture capital investments.
Minor changes were also being made to the margin of error allowed for the individual asset class weightings, it said.
The target for domestic equities in the policy was unchanged between the two years, remaining at 13.5%, Birta said.
Birta’s changes are similar to those detailed by the pension fund Frjálsi, which reported its 2022 investment policy on 22 December last year.
Frjálsi said that in recent years, the emphasis of its investment policy had been on increasing the proportion and distribution of foreign assets, and at the same time it had reduced the allocation to domestic assets.
“The investment policy for 2022 continues on this path, but in summary, the main changes are that the weight of foreign assets and equities is being increased, while the weight of bonds is being reduced,” Frjálsi said.
Outlining the main changes it is making to its investment portfolios this year, Almenni Pension Fund said at the end of November 2021 that it was increasing the weight of equities in the portfolios of its Life Portfolio II, and mutual insurance fund (Samtryggingarsjóður) to 55% from 50% this year.
At the same time, the pension fund said it was reducing the bond weighting in those investment portfolios to 40% from 43% from last year to this. The domestic equities allocation is being notched up to 12% from 10%, it said.
“The aim of this change is to achieve a higher long-term return for the portfolios in the current low-interest-rate environment, both domestically and abroad,” Almenni said at the time.
Birta said that though its investment policy was intended for the long term, it was nevertheless reviewed annually by the fund’s board, taking into account market conditions and the main changes in the fund’s environment.