DENMARK - PFA Pension is boosting its external management team in a bid to increase alpha returns for its members, and has managed to lure Danske Bank's fund selection chief to head it up.

The DKK200bn (€26.8bn) pension fund appointed Lars Holm-Pedersen to the new role of head of external managers, starting on April 22.

Investment director Henrik Franck told IPE the fund had now created a team of three to take responsibility for external managers, where a year ago there had only been one person in that function.

"Now we have three people whose sole responsibility is manager selection for our unit-link platform as well as for our traditional guaranteed environment," said Franck, adding: "We have been considering allocating more resources to this for some time."

Holm-Pedersen has more than 20 years experience in the financial sector, noted PFA Pension as he comes to the pension fund from Danske Bank where he was head of fund rating and selection in Danske Markets/Capital. Between 2000 and 2005, he also worked in ATP's funds division, focusing on external managers.

"It has been a long process getting Lars on board, and we were very fortunate to get him interested in the job," said Franck, rating Holm-Pedersen as probably the best in Denmark at manager selection.

"We would not have done it if we did not believe it will create more alpha for us. Our customers going into the unit-linked product should rest assured that the funds on offer are the best, and that we have allocated enough resources towards ensuring this."
The ongoing assessment of funds was just as important as the initial selection of them, he suggested.

Within the guaranteed part of its pensions business, PFA Pension conducts most of its investment in-house, but emerging markets and US equities are outsourced.

Franck said the move to boost the external manager team was not a sign it was planning to increase investment outsourcing, but stressed the fund was always open to possibilities.

"It's not that we're planning to outsource more; that might be an outcome, but it's not why we're doing it," he said. "We are constantly looking at this, but it might also be the other way around, that it is better to do more investment in-house.

"It's just important that when we select a manager, we make the right choice," said Franck. Choosing the right manager was just as crucial as investment choices within bond or equities portfolios, and should be prioritised as such, he said.

PFA Pension has also appointed Jesper Langmack as the new head of equities from August 1, having been head of equities at Nykredit since 2003, moving up at the institution from the post of equity portfolio manager.

The whole investment department is now increasing to 42 members of staff.