New government rules have led to a transformation in the asset allocation of Danish pension funds. Among the changes: more investments in alternatives. Reported by Reuters:
Pension funds in Denmark have had to gradually adapt to new solvency rules introduced by the Danish Financial Services Authority (FSA) since 2007, leading them to drop guarantees and take on more risk by investing in higher-yielding “alternative” assets, such as infrastructure projects, real estate and private equity funds.
Denmark’s top pension funds had on average invested 7 percent of their assets in alternative investments, excluding properties, by the end of 2012, the latest for which the Danish Financial Services Authority (FSA) has data for.
Out of the 152 billion Danish crowns ($26.4 billion) that the top funds had invested in alternative assets by end-2012, 59 billion crowns were in private equity funds, 44 billion in credit, 20 billion in infrastructure, 16 billion in agriculture and 13 billion in hedge funds.
As noted above, the average Denmark fund held 7 percent of their assets in alternatives in 2012.
The average U.S. fund holds 6.5 percent of its assets in alternatives, according to 2009 data from the Public Plans Database.