Issue 5, 2023

The Nordic Fund Selection Journal #05, October-November 2023 issue, covers a broad range of topics significant to institutional investors in the Nordic region. Key highlights include the Swedish government’s new inquiry into the governance and investment rules of the AP funds, focusing on possible board structure reforms and enhanced competency requirements, as well as the contentious proposal to remove trade unions’ and employer organizations' rights to nominate board members. This inquiry also considers investment regulations, such as lifting restrictions on direct infrastructure investments and foreign currency management. Additionally, the Danish pension fund LD Pensions adopts an unconventional approach to private equity exposure by investing through listed investment companies rather than traditional unlisted funds, aiming to balance liquidity needs with regulatory valuation demands. The issue also discusses the increasing investor interest and challenges in allocating to the green transition, spotlighting Blackrock’s survey findings that underline Nordic investors’ commitment to low-carbon initiatives alongside concerns about performance, measurement difficulties, and product availability.

The journal features in-depth analysis and interviews, notably with ATP’s Chief Investment Officer Mikkel Svenstrup, who addresses misconceptions about ATP’s risk management and performance amid recent market volatility, explaining the fund’s liability-driven investment strategy and its efforts to maintain pension promises despite asset fluctuations. The 20th anniversary of Sweden’s Sustainable Investment Forum (Swesif) prompts reflections on the evolution of responsible investing, highlighting a shift from ethical exclusions to active ownership and a renewed focus fueled by politicization and industry soul-searching. Moreover, a roundtable discussion on real estate investing explores current market challenges due to rising interest rates and evolving demand patterns, stressing the importance of quality assets and sustainability, while examining the sector’s cyclical nature and emerging thematic investment opportunities across regions. Lastly, AllianceBernstein’s Chief Responsibility Officer Erin Bigley elaborates on combining corporate responsibility with ESG integration, emphasizing the growing attention to social factors, the complexities of data and reporting, and the resilience of ESG investing despite political headwinds.

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Table of content

Swedish Government Inquiry into AP Funds’ Governance and Investment Rules

The Swedish government has initiated a new inquiry to review the governance, structure, and investment regulations of the national AP pension funds, focusing on board composition, nomination rights of trade unions and employer organizations, and potential mergers, especially concerning AP6 and AP2. The inquiry will also assess investment restrictions such as limits on unlisted assets, direct infrastructure investments, and foreign currency exposure.

LD Pensions’ Innovative Approach to Alternatives Investing

The Danish pension fund LD Pensions is exploring private equity investments via listed investment companies as an alternative to traditional unlisted funds. This approach addresses regulatory valuation challenges and liquidity constraints and aims to provide private market exposure with better risk-return characteristics and market liquidity.

Green Transition Challenges and Product Development Needs

BlackRock’s global investor survey reveals strong Nordic commitment to the green transition but highlights concerns over performance, identifying transition companies, and product availability, especially in fixed income and emerging markets. Asset managers are enhancing data tools, launching dedicated transition investment units, and developing products to support these investor needs.

Swesif’s 20-Year Journey and Future Role in Sustainable Investing

Swesif, Sweden’s Sustainable Investment Forum, celebrated its 20th anniversary reflecting on the evolution of responsible investing from ethical screening to active ownership and impact. Facing increased ESG politicization and numerous industry initiatives, Swesif contemplates its future relevance amid expanding international collaboration and regulatory changes.

Personnel Changes in Nordic Pension and Investment Firms

Recent leadership changes include Hanna Hiidenpalo stepping down as CIO of Finland’s Elo pension company, the appointment of Jonas Thulin as CIO at Sweden’s AP3, and management reshuffles at Alecta following investment controversies, reflecting ongoing shifts in Nordic institutional investment leadership.

In-Depth Interview with ATP’s Chief Investment Officer

ATP’s CIO Mikkel Svenstrup addresses misconceptions regarding the pension fund’s investment strategy, impact of interest rate volatility on its balance sheet, risk management, and governance structure. The discussion includes ATP’s robust ALM strategy, handling of market downturns, and lessons learned from the UK’s LDI crisis.

Roundtable on Real Estate Investing Amid Market Challenges

Industry experts discuss current difficulties and opportunities in real estate, emphasizing market cyclicality, rising interest rates, and structural shifts such as hybrid work’s impact on office space. They highlight the importance of quality assets, sustainability considerations, regional opportunities, and the evolving definitions of core real estate investments.

AllianceBernstein on Combining Corporate Responsibility and ESG Integration

Erin Bigley, Chief Responsibility Officer at AllianceBernstein, outlines the firm’s integrated approach to corporate responsibility and ESG investing. She discusses expanding focus on social factors, client reporting challenges, the importance of ESG data frameworks, and the enduring relevance of ESG considerations in investment decisions despite political debates.

Nordic Fund Selection Forum 2023 Highlights

The 2nd annual Nordic Fund Selection Forum in Copenhagen featured keynote insights on investment strategies in volatile times, alongside presentations on high yield, fixed income sustainability, factor investing, timberland assets, and behavioral analytics for fund manager evaluation.

Editorial and Publisher Information

Overview of Nordic Fund Selection Journal’s publication details, editorial team, distribution policy, and upcoming events, including contact information for subscribers and advertisers.