Leading Danish responsible investor ATP to cut investment team jobs

Layoffs at pension fund’s “alpha” team

ATP, the DKK714bn (€95bn) Danish labour market pension fund that is one of the world’s leading responsible investment institutitions, is laying off employees at its “alpha” portfolio unit which is tasked with outperforming the market.

It’s emerged that it is laying off nearly half of the 35 employees who work at the unit – even though it generated a decent return for the first three quarters of 2012.

In a statement, ATP said the job cuts at ATP Alpha were necessary amid a reorganisation of its business.

“The aim is to be stronger in a challenging investment environment marked by a prolonged period of weak growth, low returns, significant risks and more regulation,” the Danish buffer fund said.

ATP, a signatory to the UN-backed Principles for Responsible Investment (PRI), was among the global investors that formulated the Principles for Responsible Investment in Farmland last year. The fund helped to found Danish social investment forum Dansif in 2008.

The fund also said that as part of the reorganisation ATP Alpha would be more closely linked to its Beta – or market perform – investment team. “In this way, ATP will achieve better control of the overall investment risk and reduce cost,” it added.

ATP Alpha was created in 2006 as a complement to the beta portfolio and invests in absolute return strategies. For the period January to September 2012, ATP Alpha delivered a return of 10.5%, well above the 3.2% earned by the beta team. The shake-up coincides with the departure of ATP chief executive Lars Rohde, who is set to become the new head of the Danish central bank.In other news, corporate ethics watchdog DanWatch has released a study showing that 10 Danish pension schemes and eight asset managers hold DKK2.26bn worth of shares in firms that are involved in building or maintaining illegal Israeli settlements on the West Bank and the security barrier between the West Bank and Israel.
The United Nations regard the settlements as illegal because they have sprung up on land that still belongs to the Palestinian Authority. The international community has also criticised Israel for building a security barrier to help perpetuate the settlements. The firms DanWatch claims are making money from these projects include Caterpillar, General Motors and Hewlett-Packard of the US, Cemex of Mexico, Siemens of Germany and Volvo of Sweden.
At DKK448m, DanWatch said PFA Pension’s investment in the firms was the biggest. It was followed by Sampension, which had invested DKK130.1m, and then MP Pension and PensionDanmark, with DKK99.3m and DKK 96.2m respectively. Danske Invest led the pack of asset managers with an investment of DKK355.8m.
Asked about the investments, the institutions said they neither conflicted with the UN-backed Principles of Responsible Investment (PRI) nor the UN’s Global Compact. Said a spokesman for PFA: “We recognize that there are ethical problems associated with investments in these companies. But we as investors do not solve problems by selling off shares. We believe that the best way is to engage in active ownership and try to influence them.”