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Danica: Alternatives can be "the very foundation" of savers' portfolios

Real estate, infrastructure and alternative credit are no longer just an extra on top of the traditional asset classes of equities and bonds for the Danske Bank pensions subsidiary, according to its CIO. Investments such as Danica's 500-unit student accommodation project in Copenhagen's Nørrebro district will boost client returns in the long-term, he says.

A 29-story tower that is part of the youth apartment project in Uptown Nørrebro in Copenhagen. | Photo: Arkitema

Customers at Danica Pension have enjoyed good returns on their savings in 2016 and the first half of 2017, the pensions provider says, putting this down in part to a strong focus on alternative investments such as real estate, infrastructure, and alternative credit.

Alternative investments were formerly just an addition on top of equities and bonds in customers' portfolios, but this has changed:

"We have changed our mindset so alternative investments can make up the very foundation of our customers' portfolios. We believe that alternative investments can give high, risk-adjusted returns, and by virtue of our size as a company, we have the financial strength to engage in a lot of attractive investment opportunities," says Anders Svennesen, Chief Investment Officer at Danica Pension, in a press release.

He points out that alternative investments can not only be the key to higher returns, but also provide more stability in the customers' returns, due to the value of alternative investments not fluctuating the same way as prices on equities and bonds.

"Alternative investments often require a very long time frame where hard work today pays off in the future. A good example is Uptown Nørrebro, where we are currently in the process  of establishing about 500 student apartments in Nørrebro, Copenhagen. That is a big investment which we are making with the expectation that our customers will later on receive good returns from the projec," Svennesen says.

Uptown Nørrebro by Nørrrebro Station will be finished in summer 2019 according to the plan, and the project includes, among other things, an eye-catching 29-story tower with student appartments. 

"It's a spectacular project because we are not only securing an attractive long-term investment for our pension customers, but also contributing to the solution to the severe shortage of student accommodations, Svennesen says.

English Edit: Marie Honoré

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