Denmark’s Biggest Pension Fund Targets Foreign Real Estate

(Bloomberg) -- Denmark’s biggest commercial pension fund plans to make future real estate investments mostly outside the Nordic country, as shifts in financial markets force a rethink of asset management.

PFA Pension A/S, which manages around $100 billion, said it will look to investing more in Europe, Asia and the U.S. in the coming years. About 55% of its real estate holdings are already outside Denmark, the fund said in a statement.

“The financial markets are experiencing big changes, and therefore it’s important to adjust the composition of customers’ savings to ensure solid, long-term returns,” Chief Executive Officer Allan Polack said.

Real estate and property investments have become a central plank in the Danish fund’s strategy to compensate for record-low bond yields. The number of negative-yielding bonds exceeds $13 trillion globally, and though that’s down from a peak of almost $17 trillion, the chances of a further decline is diminishing amid prospects of more central bank rate cuts.

PFA investments in unlisted assets now tops 100 billion kroner ($15 billion), or 20% of its portfolio, the fund said on Thursday. About 44 billion kroner of that is in alternative assets such as wind farms and telecommunications, while around 57 billion kroner is in real estate.

To contact the reporter on this story: Frances Schwartzkopff in Copenhagen at fschwartzko1@bloomberg.net

To contact the editors responsible for this story: Tasneem Hanfi Brögger at tbrogger@bloomberg.net, Nick Rigillo

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