Danish pension fund Velliv has made sweeping changes to its investment department, yesterday shedding its entire active equities and alternatives teams, losing 11 staff, as it implements a new index-based strategy and awaits the arrival of a new chief investment officer next week.
The fifth largest pension fund in Denmark, with DKK270bn (€36.2bn) under management, gave IPE details of the investment strategy overhaul mentioned by chief executive officer Kim Kehlet Johansen in November, after Christoph Junge, head of alternative investments, posted on LinkedIn yesterday afternoon that he and five teammates had suddenly been made redundant.
A spokesman for Velliv confirmed to IPE that the institution had closed its alternatives team, as well as the active equities team, and that this was closely linked to its new investment strategy.
He said: “Today, we have bid farewell to a total of nine employees in the investment department. In addition to closing the alternative-investments unit, we have also closed the active-equity unit.
“This is also a consequence of our new investment strategy. Furthermore, two additional employees have resigned.”
Asked to outline the basic elements of the new strategy and its rationale, the spokesman said, referring to Velliv’s main market-rate life cycle pension product: “In the new VækstPension Aktiv [GrowthPension Active], we are building on the solid foundation of VækstPension Index – a ‘core’ – and adding selective dynamic investments on top of that – so-called ‘dynamic returns’.”
In the new VækstPension Aktiv product, he said, Velliv was creating simpler, more transparent portfolios, making it easier to make the right decisions at the right time.
“We are becoming more aware of how we are spending our time. We will spend more time on the dynamic strategies where we believe we can make a difference, instead of spreading ourselves too thin,” he added.
Velliv was also significantly reducing the costs associated with external managers, and was passing those cost savings on to customers, he continued.
“At the same time, the dynamic investments must deliver returns relative to the market,” the spokesman said.
Alternatives will make up a smaller portion of the portfolio, he said. The alternatives portfolio, which includes private equity, private credit, infrastructure, and timberland, is worth about DKK30bn.
Junge said on LinkedIn yesterday: “After seven incredible years at Velliv, my time as head of alternatives has come to an end due to a strategic shift that significantly reduced the role of alternative investments, despite their strong performance.”
As a result, he said, the entire alternatives team was made redundant yesterday.
“While this is surprising and never easy to see talented colleagues affected, I remain optimistic about the future and the opportunities ahead,” Junge wrote, and listed highlights of what he said the team had accomplished.
He said he had no doubt his team members, Michael Røhling Pedersen, Thomas Walther Jørgensen, Tobias Hasforth Elf-Pedersen and Snorre Kofoed-Hansen, would go on to achieve great things.
Waiting for a new CIO
It is understood Velliv will announce the name of a new CIO next week.
The pension fund has been without a permanent CIO since November, when Anders Stensbøl Christiansen – who had been in the role since July 2017 when the firm was still called Nordea Life & Pension – resigned.
At the time, Kehlet Johansen, joined Velliv earlier last year from ATP, said he had decided Velliv needed “new eyes and other skills in the investment area” in connection investment strategy work.
In the meantime, deputy CIO Thor Schultz Christensen has been handling day-to-day investment management.
Velliv announced in October that it had revamped the investment approach for its sustainability-focused pension product, VækstPension Aftryk, while Stensbøl Christensen told a conference in Amsterdam that the pension fund wanted to move the focus of its impact investments from Denmark and surrounding geographies towards the Global South.
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