Why Danish Pension Funds Are Shunning Hedge Funds

The Danish pension fund PFA is changing its investment strategy by eliminating middlemen like hedge funds to improve returns on its $83 billion assets. This shift is driven by low global interest rates, which pressure fund managers to maximize returns. Pension funds are revisiting fees, potentially affecting the entire industry. Third-party managers with high fees and easily replicable strategies are most at risk. However, pension funds managing investments themselves face risks due to less oversight compared to other financial sectors.

How are low interest rates affecting fund managers and their strategies?

What are the reasons behind pension funds revisiting fees at this particular time?

What impact might the changes in fee structures have on the pension fund industry as a whole?

Which third-party managers are at the biggest risk of being replaced according to the discussion?

What risks do pension funds face when they start managing more investments themselves?