- Top Danish funds search for ‘true divers...
- Keva in emerging market overhaul
- NBIM headhunts five chiefs
- Swedish government skewing AP fund rules
- Nordic funds regain private equity appetite
- Swedish investors mull lessons from hedg...
- Realigning to emerging markets
- Funds reassess traditional active approach
- Danish DIP persists with diversified out...
- Länsförsäkringar eyes senior bank debt
This year will be remembered for the comeback of one asset class. While Nordic pension funds have previously been keen to diversify their investments into equities and alternatives at the expense of fixed income, the recent market crisis has made bond holdings reappear at the top of the investment agenda.
Finnish pension funds, having been particularly keen to boost their equities and alternatives in recent years, are no exception and have taken some defensive measures and shifted back into bonds (see page 15).
Some, like the Icelandic funds, are lucky. They have moved back into the comfort and safety of their government inflation-linked bonds, which provide them with returns that are higher than they are required to be. Others, like some Danish and Finnish funds, have been looking into possible ways of taking advantage of the crisis through opportunities within the credit market.
But Icelandic government bonds may be an asset class that other Nordic investors should consider. Kaupthing’s head of institutional asset management, Marinó Örn Tryggvason, believes we could be on the brink of a foreign push into Icelandic government bonds (see page 23).
“I believe now is a great time for foreigners to invest, since the Icelandic krona is quite weak. I believe the situation now is quite similar to 2002 and 2003, when there was huge interest from abroad for these kinds of bonds and that we are in the early stages of foreign investments into these bonds,” he says.
But there is no need for equity and alternatives managers to worry. This trend is likely to only be a temporary measure to control damage from the market crisis. nrpn’s investor survey shows that pension funds are eager to continue increasing their exposure to equities and alternatives (see pages 16-17). In the next six months, more than 60 per cent expect to increase their equity holdings and more than 40 per cent plan to reduce their bond holdings. Private equity seems to be the one alternative asset class that is still standing strong despite market turmoil.
Pension fund managers are also eager to point out that this is just a short-term tactical call and that no changes have been made to the long-term strategies. As Risto Murto, Varma’s chief investment officer, says: “Reducing equities is just a tactical move. Long term, we plan to add more equity risk, but it depends on the market situation and our solvency position.”
Caroline Liinanki
Editor
