Danish life insurance company, Lærernes Pension, has announced it has sold off DKK 3.5bn worth of US Government bonds over the past month, joining fellow Danish pension fund, Akademiker Pension.
According to Lærernes Pension investment director, Morten Malle, the sale was partly due to uncertainty about the long-term US debt situation and the independence of the US Federal Reserve.
"We are seeing increasing uncertainty about the long-term debt situation in the United States, monetary policy, inflation and the dollar exchange rate, which is why we sold US government bonds worth DKK 3.5bn at the end of December and bought German Government bonds instead,” he explained.
Lærernes Pension confirmed that the divestment will not impact its ability to generate good long-term returns to pay the pensions of Danish teachers, educators, school administrators, as well as teachers in Greenland.
"When you take everything into account, German Government bonds offer roughly the same return as American bonds, so the restructuring will not affect the expected return," Malle said.
Lærernes Pension noted that it is one of several Danish pension companies that have chosen to reduce their investments in US Government bonds after being considered a safe haven for many years.
Indeed, last week AkademikerPension announced it is divesting US$100m worth of US Government bonds, due to the country’s “weak public finances”.
AkademikerPension investment director, Anders Schelde, said the US’ weak public finances have led the fund to conclude that it needs to find a new way of managing liquidity and risk.
In addition, Swedish pension company Alecta has sold off US Government bonds worth around SEK 50bn.
