DENMARK – Three sector-wide Danish pension funds have pooled assets and appointed US investment manager T. Rowe Price to run a DKr1.5bn (e201m) global high-yield bond brief.
The engineers’ scheme, Dansk Ingeniørforenings pensionskasse (DIP), the doctors’ pension fund, Lægernes pensionskasse (LPK), and the fund for lawyers and economists, Juristernes og økonomernes pensionskasse (JØP), are joining forces on investment for the first time.

“I think that the reasons behind this are that all the funds are middle-sized pension funds with a rather small internal investment team. Basically, I think it’s a very good idea to discuss and work together on common interests because to gather all internal resources means that we get closer to best practice,” says Claus Stampe, chief investment officer at LPK.

He notes that economical reasons are partly behind the decision but the main idea is to co-operate with others and share experiences.

“Of course to some extent it is money but in my mind it’s not the most important thing here; it is more about drawing opinions together and discussing things with other pension funds,” says Stampe.
“From time to time we will work together with some other pension funds if we can find something of common interest and if it makes sense to do it,“ he adds.

Flemming Madsen, responsible for institutional sales to the Nordic region from T.Rowe Price’s Copenhagen office, comments: “ We have a very strong high yield capability and there seems to be a lot of interest there.
“ Traditionally Danish pension funds have been large bond holders and they are looking for more diversification.
“ However, for them to diversify it doesn’t make sense to move into European government bonds, I think they are looking for something further away for true diversification and high yield seems to be a very attractive asset class.”

Recent tax changes in Denmark, which raised equity tariffs and lowered that of bonds to the same 15% level have also made it more attractive for pension funds to take more risk on the fixed-income side, Madsen notes.