Infra top performer for PensionDanmark in ‘challenging market’

The asset class generated a 12.5% return and the allocation could be increased, CIO Claus Stampe tells us, despite recent local watchdog censure on infrastructure investments.

PensionDanmark has reiterated its commitment to infrastructure and real estate investing following strong performance in 2018 from the two asset classes, amid negative returns from listed equities.

The Danish pension fund described its overall performance as “satisfactory”, despite a “challenging market”. Infrastructure’s 12.5 percent return was its highest performer, closely followed by real estate at 10.1 percent.

Its listed shares portfolio delivered a negative 9.6 percent performance, attributed to a higher currency hedge than the fixed benchmark and managers not delivering “excess return in this year’s turbulent markets”.

“Danish pension savers should expect to receive more moderate returns than the historically high returns achieved in the years leading up to 2018,” warned chief executive Torben Möger Pedersen in his outlook. “It also means that we will continue to invest in real estate and infrastructure.”

This could potentially result in an increase in allocation, according to chief investment officer Claus Stampe, who told Infrastructure Investor that ‘if we can find sufficiently attractive opportunities, our aim is to increase our infrastructure and real estate exposure from 20 to 22 percent. over the coming 1 to 2 years”.

PensionDanmark had direct and indirect infrastructure commitments totalling Dkr23.9 billion ($3.6 billion; €3.2 billion), as at the end of 2018, comprising 11.4 percent of the scheme’s portfolio. Its presence in the three funds launched by Copenhagen Infrastructure Partners since 2012 covers about half of the portfolio.

New investments in the sector in 2018 included direct, minority acquisitions of stakes in UK healthcare group Regard and US-based transport and logistics company ITS ConGlobal, both majority-owned by AMP Capital. Fund investments comprised commitments to KKR Global Infrastructure Investors III and Digital Colony Partners.

PensionDanmark was one of five pension funds to be censured by local financial supervisory authority Finanstilsynet last month, as part of the body’s long-running investigation into Danish pension funds’ infrastructure investment. Finanstilsynet said PensionDanmark’s “risk profile set was deficient”, although the scheme responded by saying that its objective of generating attractive and stable returns for its members was being met.