Nordea Bank Sweden’s Pension Foundation represents collateral for pension commitments borne by the Swedish companies and branches within the Nordea Group. One form of investment undertaken by the Foundation is to invest in funds encompassing equities issued by companies in the EEA (European Economic Area) that are traded on a regulated market.
Nordea Bank Sweden’s Pension Foundation provides the following statements in accordance with the Swedish Act on Securing Pension Obligations (1967:531).
Policy for shareholder engagement
The Foundation has engaged Nordea Investment Management AB (NIM) to manage the Foundation’s investments in accordance with the principle of discretionary management. This means that NIM regularly makes decisions about the Foundation’s investments within the framework of the agreement.
NIM instructs Nordea Funds Ltd (NF) or Nordea Investment Funds S.A. (NIFSA) to manage the funds included in the Foundation’s portfolio. NF and NIFSA apply their own internal rules and practices concerning active ownership in their shareholder engagement activities, in which they represent all owners of the funds, including the Foundation.
Against this background, the Foundation does not conduct any engagement activities on its own, and it is thus not relevant for the Foundation to adopt its own policy for shareholder engagement.
Further information about the engagement activities carried out in relation to the funds managed by NF and NIFSA can be found on this page.
The Foundation has adopted an investment strategy which makes it possible for the portfolio as a whole to generate a good return over the medium to long term, given that the pension commitments, for which the Foundation represents collateral, run for a long time. The objective is that the return will exceed the financing cost of the commitments by one to two percentage points per year over the long term. The equity investment strategy (as well as the overall investment strategy) builds on the principles of matching, diversification and portfolio investments.
- The matching principle means that Foundation’s portfolio is invested in such a way as to make it possible to achieve the return objective.
- The diversification principle entails that the portfolio encompasses a spread of different asset classes, markets, sectors etc., with the aim of minimising the effect of individual events among the portfolio’s holdings.
- The portfolio principle means that the portfolio may contain assets which on their own may been seen as risky, but which in the context of being part of the portfolio have characteristics which mean that the matching and diversification principles are adhered to.
The Foundation’s investments are carried out in accordance with the Nordea Asset Management Responsible Investment Policy, which entails, among other things, that sustainability factors are taken into account in investment decisions. This also contributes to ensuring a viable development of the portfolio in the long term.
Agreement with asset manager
According to the agreement with NIM, the Foundation receives regular written reports regarding the portfolio’s development, its contents and other matters. In addition, NIM regularly attends the Foundation’s board meetings, where NIM presents the portfolio’s development and reports on any relevant market events and market prospects which can potentially affect the portfolio in both the short and long term.
The agreement with NIM applies until further notice, with the possibility for both parties to terminate the agreement after observing a certain period of notice. The fee which NIM receives for their assignment is based on the market value of the Foundation’s portfolio. The fee involves a performance-based component in that an increase in the portfolio’s value results in an increase in the fee. Thus, NIM has an incentive to work to ensure that portfolio develops positively in the long-term.
The portfolio’s return after deduction of transaction costs forms the basis of the Foundation’s assessment of how NIM has performed its assignment. In this way, the Foundation monitors NIM’s costs for the portfolio’s turnover.
The Foundation does not monitor the portfolio’s intended turnover rate or limits on the turnover rate. The reason for this is that the Foundation instead evaluates NIM’s return after deduction of transaction costs.
The Foundation’s follow-up and evaluation of NIM’s assignment, together with the Foundation’s possibility to terminate the agreement, encourages NIM to base its investment decisions on assessments of the portfolio companies’ results, in order to ensure that the portfolio gives as good a return as is possible. In the same way, the agreement encourages NIM to engage in the portfolio companies with the aim of improving their results.