LD Pensions has appointed Federated Hermes International as its new equity manager. They will manage LD Pensions’ equity investments in global emerging markets. A long-term approach, independent risk monitoring and a strong focus on ESG were all key factors in the decision to select Federated Hermes International.
Emerging markets are actually a difficult asset class to perform well in, so we are delighted to have found Hermes. We are gaining a fund manager who fits well with our overall portfolio values and who has a team capable of delivering excess returns over the long term through thorough equity analysis and a concentrated portfolio – which is our objective.
In LD Pensions, they were looking for a fund manager who could draw on their specialist knowledge of specific companies and, with a deep understanding of those companies, anticipate future growth and take large positions in them. Hermes invests in high-quality companies where the price relative to the company’s future earnings is not too high.
LD Pensions focuses on the integration of ESG
With Federated Hermes International as its fund manager, LD Pensions will also see the integration of ESG into its overall portfolio strengthened, which was also a key factor in the decision. In addition to its investment arm, Federated Hermes International also operates Federated Hermes EOS, a specialist provider of ESG and active ownership services. Since the 1990s, Federated Hermes EOS has conducted ESG research, engaged in dialogue and voted at general meetings on behalf of Federated Hermes International’s portfolios. The investment team works closely with Federated Hermes EOS and has a dedicated ESG analyst attached to it, whilst the equity analysts place a high priority on ESG risks in their stock selection.
“ESG is one of the major risks of our time, but it should also be seen as an opportunity. Companies in emerging markets often lag behind their counterparts in developed markets when it comes to ESG. So integrating ESG risks and opportunities into companies’ decision-making and engaging in follow-up dialogue is extremely important in these markets. That is why we are also delighted with Hermes’ strong focus on and experience with ESG,” says Kristoffer Birch.
The investment team is based in London, but Federated Hermes International is owned by the US-listed financial group, Federated Hermes.
All new shareholder mandates in place
18 Danish and international asset managers submitted bids in LD Pensions’ EU tender for the equity mandate. Federated Hermes International was awarded the contract following a two-round evaluation process. Both funds managed by LD Pensions – The Cost-of-Living Allowance Fund and The Holiday Allowance Fund – will benefit from the forthcoming collaboration. The management of LD Pensions’ assets is expected to commence in the first quarter of 2021.
With the inclusion of emerging markets in its equity portfolio, LD Pensions has completed the tender process for all its equity mandates over the past year. In 2021, LD Pensions will complete a further two EU tenders in the credit sector.
LD Pensions currently manages DKK 32 billion, which stems from the contributions made during the period of high inflation in the late 1970s. In 2020, LD Pensions began managing holiday allowance funds from the transitional year leading up to a new holiday pay legislation. These funds will be partly invested in securities and partly held as receivables from employers.
