Denmark’s Lærernes Pension has cut the number of companies in its share portfolio down to 1,000 companies from around 2,600.

Over the past year, Lærernes Pension has worked on a major reorganisation of the share portfolio. It has focused on having larger investments in a smaller number of companies.

"It is important to have a certain spread of investments in order to not to be too vulnerable if individual companies perform poorly over a period of time. However, at some point when you have achieved a sufficient variety, you do not gain anything from the risk by expanding the share universe even more. We believe that we have reached the right level after the restructuring,” Lærernes Pension head of equities, Robert Neumann.

As part of the restructioning, the pension fund has also reduced the number of external managers it uses. It has also stressed to managers that they need to have their own strong processes for the integration of factors, such as the environment, good management and social conditions, when investments are made on behalf of its members.

In addition, the strategy itself for the share universe in Lærernes Pension has been overhauled. In future, Lærernes Pension will adopt a more index-based approach to share investments, which follows the general development of the share markets to a greater extent, rather than using managers who try to beat the market.

“We have been able to halve the fees for our equity investments by leaning towards a more index-based solution. It will save us more than DKK 200m over a five-year period, and unlike returns, it is a very safe figure we can count on," Lærernes Pension investment director, Morten Malle, said.

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