Despite a challenging domestic climate, Iceland’s Gildi is faring better than its competitors, writes Caroline Liinanki.
With Iceland still reeling from the credit crunch and the future of the krona uncertain, Marinó Örn Tryggvason, Kaupthing’s head of institutional asset management, tells Caroline Liinanki why inflation-linked government bonds are still a good horse to back.
The combination of high inflation and the depreciation of the krona has created a stir in the Icelandic pension industry. Caroline Liinanki finds out what tactical allocations have been made.
More freedom of investments and increasing pressure to diversify has made Icelandic pension funds look at a wider range of assets.
Just as Icelandic investors thought the country’s interest rates could not get any higher, the central bank raised them to a European high of 15.5 per cent.
After a lacklustre year, the Icelandic General Pension Fund is convinced private equity is the way to go
Iceland’s €300m Engineers’ Pension Fund has said it will increase its exposure to alternatives in an effort to fight recent market volatility.
The Central Bank of Iceland has given no indication it will cut interest rates in the spring, despite industry calls for a reduction. On February 14, the bank voted to keep interest rates at 13.75 per cent, one of the highest in Europe.
Iceland’s €1bn Stapi pension fund has increased its exposure to fixed income and absolute return strategies, at the expense of its equity portfolio.
With the country’s interest rates giving many global commentators vertigo and an ever-weakening Icelandic krona, there are tough decisions ahead for the Central Bank of Iceland as it faces increasing calls for change. But will any state interest rate reductions come too late to stablise the economy and how can Iceland ensure its financial leaders are not just papering over the cracks?