Stockholm (NordSIP) – All of eighteen candidates responded to LD Fonde’s tender request, eager to take on the pension manager’s emerging market equities mandate. After careful consideration and two rounds of evaluation, the search is finally over and the mandate goes to Federated Hermes International.
LD Fonde handles the strategic and tactical management of the investments for two Danish pension funds: Lønmodtagernes Feriemidler (Danish employees’ vacation money) and Lønmodtagernes Dyrtidsmidler (the employees’ “frozen cost-of-living allowances”, a way of automatically adjusting the wages to cover the increase in the costs of living). According to the announcement, both funds will benefit from the upcoming collaboration with Federated Hermes, expected to start in the first quarter of 2021.
The motivation behind LD Fonde’s final decision seems straightforward: Federated Hermes International managed to exhibit long-term thinking, independent risk monitoring and focus on ESG. “Emerging markets are a notoriously difficult asset class to manage, so we are glad we have found Hermes. We chose a manager who fits in well with our values. Their extensive team, thorough stock analysis and concentrated portfolio can hopefully deliver excess return in the long run, which is our goal,” explains Kristoffer Birch (pictured), equity manager at LD Fonde.
With Federated Hermes International as a manager, LD Fonde aims to strengthen the integration of ESG in the overall portfolio. Apart from being committed to incorporating ESG considerations as fundamental factors in their investment decisions, Federated Hermes, through their specialist stewardship services team EOS, has a 15-year track record of effective engagement, seeking to advance best-practice active ownership for the benefit of investors, companies and the world at large. The investment team works closely with Federated Hermes EOS and a dedicated ESG analyst, as well as all equities analysts involved, weight ESG risks highly in their stock selection.
“ESG-related risks are among the greatest challenges of our time, but must also be seen as an opportunity. Emerging markets companies are often lagging in the ESG area compared to companies in the developed markets. So the integration of ESG risks and opportunities into the investment decisions and a follow-up dialogue is crucial in these markets. That is why we are very pleased with Hermes’ great focus and experience within ESG,” says Kristoffer Birch.
The successful choice of an emerging market equities manager completes LD Fonde’s search within the overall equity portfolio. The next step for them is to find partners for two credit mandates. The tenders are out and new announcements await during 2021.
LD Fonde currently manages DKK 32 billion, accumulated in the old Lønmodtagernes Dyrtidsmidler fund since the late 1970s. With the new Danish Holidays Act, which came into force on 1 September 2020, and the creation of the new fund, Lønmodtagernes Feriemidler, the capital under management is set to increase in the coming years.
Featured image courtesy of LD Fonde