How AkademikerPension excludes China state assets

The Danish retirement fund for academics has long screened out companies and countries from its portfolio, but has further stepped up its focus on ESG issues in the past few years.
How AkademikerPension excludes China state assets

Amid the much-touted focus on environmental, social and governance (ESG) issues these days, some investors – like Denmark’s pension scheme for the academic sector – adhere to their principles rather more strictly than others.

The DKr135 billion($21.83 billion) fund hit the headlines in September for banning assets linked to mainland China from its portfolio because of Beijing’s human rights violations in Hong Kong, Xinjiang province and elsewhere. But AkademikerPension has been voting with its wallet for several years in respect of such issues.

Before its move in respect of China, the fund had already screened out government-related assets in countries such as Iran, Saudi Arabia and Thailand, whose regimes have questionable records on human rights.

The 36-strong exclusion list – which contains both companies and nations – has been growing for several years, but took a jump two years ago due to stricter internal policies, chief investment officer Anders Schelde told AsianInvestor last month.*

Anders Schelde

He went on to explain more about the fund’s processes in this regard and its approach to China in particular.


AkademikerPension plans to sell all its shares in Chinese state-owned enterprises (SOEs) and all bonds issued by the government and SOEs. The biggest chunk, amounting to DKr240 million, is in government debt and will be offloaded by the end of 2020. Most of its state-linked Chinese stocks have already been sold.

“After the recent decision to ban Chinese government bonds, we have decided to customise our fixed income benchmarks by taking out China and other countries we have excluded,” Schelde said.

The fund will retain shares in private-sector companies in the country, but is unlikely to retain any Chinese bond exposure, he added. “I don’t think any manager would take corporate bond exposure in a market where government debt is excluded, even if they are permitted to.”

The move will slightly reduce its listed exposure to Asia, which is largely provided by active equity and fixed income strategies and is in line with the MSCI All Country World Index for equities and the JP Morgan Emerging Market Bond Index. 

While the exclusion will affect a tiny part of the portfolio, it makes a strong statement, especially given the potential growth it could preclude. 

That said, Schelde conceded that even private companies might not be truly separate from the state in China. “We’re trying to do it on a ‘best effort’ basis,” he said. “So if we find out a company is de facto controlled by the government, we’ll add it to the exclusion list.

“It’s very difficult to know which companies are controlled by the government in China. You might argue there are many supposedly private companies that are under state control.”

Similarly, countries can move in and out of the fund’s exclusion list. Ethiopia was re-included in early 2020, while Myanmar was excluded again recently after being dropped from the list early this year.


AkademikerPension has placed a strong focus on broader ESG issues within its investment strategy for decades, but under new management it has stepped up its efforts in the last three or four years.

Schelde has “four-and-a-half” full-time professionals dedicated to this area. But all the fund’s employees have a strong focus on ESG matters, arguably more so than those at other pension plans or fund managers, he added. “[For instance,] I spend a lot of time on it, our CEO spends a lot of time on it, our head of equities spends a lot of time on it.”

In keeping with this approach, AkademikerPension is now taking an increasingly activist approach to climate-related investment, as AsianInvestor reported earlier this month. This strategy will see it increase its focus on Asia, a region that is hugely dependent on coal, the most polluting of all fossil fuels.

* A full interview with Anders Schelde will appear in the upcoming issue of AsianInvestor.

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