Denmark’s ATP Poised for More Risk Investments in 2021

Posted on 02/13/2021

Denmark’s massive statutory pension fund ATP experienced gains in its investment portfolio in 2020, generating a 23.3% investment return. In 2019, the fund’s investment return was 39.7%. ATP runs an investment portfolio and a hedging portfolio. The combined investment and hedging return was 17.6 billion kroner for the year ended December 31, 2020 compared with 29.9 billion kroner for 2019. ATP has so far dedicated about 80% of its assets to a hedging portfolio filled with fixed income products. With negative interest rates pressured on some European government bonds, the Danish government permitted ATP to free up to 25% of the allocation to the hedging portfolio on risky assets, which includes stocks, real estate, infrastructure, and hedge funds.

While other asset classes like equities and private equity generated positive returns in the investment portfolio, infrastructure returned a negative 1.7 billion kroner for 2020. A major contributor to the loss in that asset class was ATP’s investment in Copenhagen Airport, which has been partly closed since March 2020.

ATP’s total assets swelled to 960 billion kroner at the end of 2020.

ATP had increased its target for sustainable bonds to 50 billion kroner for 2021 from 30 billion kroner, nearly meeting the former green bond target at the end of 2020. ATP renamed the asset class from green bonds to sustainable bonds, in order to encompass social bonds.

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