Denmark’s biggest commercial pension fund PFA has pledged to get more involved with the companies in which it invests.
The DKK417bn (€55.9bn) fund said it would become a more active investor from now on, in order to ensure good returns and governance.
The fund said it would use its voice at annual general meetings (AGMs) rather than criticise firms through the media.
Jesper Langmack, director of PFA’s asset management arm PFA Kapitalforvaltning, said: “PFA has mainly been a passive investor before.
“But, increasingly, we will be a more active investor, seeking to have an influence over the pensions money we invest directly in businesses.”
PFA said its investments were coming under increasing scrutiny from its own customers as well as international investment banks that followed its activities.
“We would like to be seen as a professional and responsible asset manager that pension customers can trust, and one with which other institutional investors want to work with,” Langmack said.
This means taking a more active approach, he said.
Explaining what the pension fund hoped to achieve with this, he said: “First and foremost, of course, we want to contribute towards ensuring a good return for those companies for the benefit of PFA’s pension customers.
“Secondly, we want to put a focus on returns being generated on a responsible basis and in line with recommendations on good governance.”
The fund said it currently invested directly in 25 listed Danish companies.
In the last few years, PFA said its investment approach had gone in the direction of fewer but larger direct investments in quoted companies.
Because it is now putting more capital into companies, Langmack said it was quite natural the pension fund would use the influence that went with the shares.
“However, we will not be asking for seats on the board,” he added.
Contact with the companies’ management will generally take place behind the scenes, he said.
“Of course, as an investor, it is in our interests that the value of a business not be damaged,” he said.
For that reason, he said, it would often be a bad move to go to the media to criticise a decision made by a company it invested in.
“Instead, we will typically take up contact directly with the company and give them our opinion,” he said.
However, Langmack said PFA did intend to speak publicly at the AGMs of some of companies.
“We will, from time to time, take the opportunity to put demanding and critical questions from the podium to the management of the companies,” he said.
Langmack said he was currently working on speeches he and his portfolio managers would be delivering at the AGMs of a number of companies, but gave no specific details.