Denmark’s DKK50bn (€6.7bn) pension fund Lønmodtagernes Dyrtidsfond (LD) said there was strong interest in the four equities mandates it has put out for tender, with 150 different asset managers putting themselves forward.
LD’s director of finance Lars Wallberg told news site Finanswatch: “We are very pleased that there is the competition that our members deserve.”
The four equities mandates LD put out in November were global equities, emerging markets equities, Danish equities and climate equities.
Compared with the last time the pension fund had searched for managers, Wallberg said LD had included more precise requirements for managers in this tender because of the experience it had gained and the nature of the fund’s equity strategy.
“This means that some have kept away because we have high minimum demands, and we have refined the metrics we will use in the rest of the process,” he said.
Out of the 150 managers registering their interest, nearly 50 firms asked to be considered for pre-qualification for the global equities and emerging market equities mandates, LD said.
A further 20-30 firms are expected to bid for the other two mandates, it said.
Given the high level of interest, Wallberg said he expected LD to end up with 15 firms pre-qualified for each of the four mandates, which would then be asked to submit formal bids.
“Our plan was to get it settled before the summer, and that still stands,” he said.
LD manages cost-of-living allowances granted to public sector employees in the past and receives no current contributions.
Meanwhile, Danica Pension reported 2013 returns of between 5.9% and 14.3% for its customers, and said the lower-risk equities strategy it was pursuing left its returns at the lower end of comparison tables.
Pension customers with 15 years before retirement received a 7.7% return in 2013, while those with 30 years to retirement got 14.3%, the Danske Bank subsidiary said.
The return for customers with five years to go was 5.9%.
Peter Lindegaard, investment direct at Danica Pension, said: “The return for 2013 is high in absolute terms, but at the low end in relation to competitors.”
When investing on customers’ behalf, Danica chose solid companies with high profits, low levels of debt and solid earnings year after year, he said.
“We could well have got a higher return by investing in riskier shares in a year when equity markets have galloped ahead, but that is not part of our long-term strategy,” he said.
Lindegaard forecast a more muted development on stock markets in 2014, with bond yields rising as the global economy recovers.
“We see a good chance our strategy and our investments will do well, compared with others,” he said.
This was because the pension investments were broadly diversified and contained an increasing proportion of alternative investments, which could be expected to do well when the Western economies recovered, he said.
“We will invest more in small and medium-sized companies, infrastructure, forestry and agriculture,” Lindegaard said.