Whereas the funds currently only invests in Danish bonds, going forward it will be able to invest up to 20% of assets under management in foreign bonds issued in EUR, SEK or NOK.
The reason for the change in the funds’ investment framework is that the Danish parliament (Folketinget) has decided that social housing in Denmark will in future be financed with government bonds rather than mortgage bonds. At the same time, the mortgage credit sector is also undergoing a period of consolidation.
As a result of this, there will be fewer issuances of new mortgage bonds and from fewer Danish bond issuers, which means the funds can no longer comply with their legal obligation to spread investments across different bond issuers without having to invest more in Danish government bonds. A higher share of Danish government bonds could potentially lead to a slightly lower return for the funds over the long term. However, the changes to the investment framework give the funds an alternative to investing in Danish government bonds.
The funds’ investments in both Danish and foreign bonds will as always be in bonds of high credit quality. The currency risk on the foreign bonds will be hedged.
The changes are expected to apply from 13 November 2019. Read more in the shareholder notice