Danish labour-market pension provider Sampension has been gradually reducing its exposure to listed equities in order to protect its overall portfolio from a possible market correction.

Henrik Olejasz Larsen, CIO of the DKK260bn (€34.9bn) pension fund, said: “We have taken some of our overweight in shares down very gradually, and we don’t have as many shares in our risk total as we had before.”

The move had been made, he said, with a view to avoiding being as hard hit as the fund might be, if and when there was a correction in global equity markets.

“We have had a long recovery in the equities market, and we can’t expect the current high level of earnings in many of these listed companies to continue at a time when the economy is not going as fast as it is right now,” Olejasz Larsen said in a video commentary on Sampension’s website.

Share prices were particularly high right now, he said.

“They are so high that they are on a level that we have only seen a few times in recent history – back at the end of the 1920s, or back in the period running up to the bursting of the dotcom bubble,” he said.

“The risk is that our expectations will be disappointed, but there is nothing that points towards it being the same as last time time, because things are going really well regarding the underlying economy, and corporate earnings are still growing.”

Equities were also expensive because bond yields remained so low, Olejasz Larsen added.

At the end of 2016, Sampension had 24.3% of total assets invested in listed shares and 50.5% in bonds, including interest-rate hedging.

In addition, 9% of assets were invested in property, land and infrastructure, and 7.5% in bonds with credit risk, according to the fund’s annual report.

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