Danish Pension Fund To Revise Investment Policy
The Danish Pension Fund, which is the largest in Northern Europe in terms of assets under management, is getting ready to revise the procedure for investing in order to avoid losses from investments in instruments with negative returns, Bloomberg writes.
The ATP fund, which manages $ 703 billion of assets, traditionally focuses on highly liquid government bonds in its strategy. However, in recent months, this tactic has begun to cause losses due to negative market returns caused by increased investor interest in bonds.
At the same time, Denmark became the first European country whose Central Bank lowered its key rate (which determines the level of other rates in the debt market) below zero. Two years later, the European Central Bank began to pursue the same policy.
Now ATP is considering alternative investment areas, prioritizing those with large blocks of shares of companies (private investments), real estate and infrastructure projects. They may receive up to 130 billion dollars available to the fund.
ATP contributions are required for all Danish workers and businessmen. In the case of employees, they are automatically deducted from the salary, and their value depends on the income of the insured. Upon reaching retirement age, payments from ATP supplement the basic state pension.
In August 2019, the global debt market experienced a peak in negative returns. Total negative yield bonds totaled $ 15 trillion.