Investment Strategy
Our investment strategy secures a framework for maximazing the risk-adjusted returns to support our philanthropic work and to protect our equity. The board of directors sets the strategy, the executive management board makes tactical decisions, and the investment team is responsible for day-to-day operations.
Realdania is here for current and future generations. The long-term strategic goal of the investment strategy is to generate returns like those of global equities but at a lower market risk. The investment strategy is based on a risk budget approach defined by the board of directors.
It also builds on a specific target for equity development. The financial markets fluctuate, and to ensure that actual equity development is as close to our target as possible, we have implemented various models and methods to manage equity development.
The board of directors has implemented control mechanisms and rules that take effect if equity falls by more than expected. Similarly, the board of directors can increase philanthropic grants in periods when equity rises by more than expected.
Based on the investment strategy, we analyze the expected long-term returns. With this, the board of directors stipulates the level of capacity for philanthropic grants.
Who decides what?
Our strategy for non-philanthropic investments builds on segregation of responsibility between the board of directors, the executive management board, and the investment team.
- The board of directors decides the investment strategy and sets the strategic framework for our non-philanthropic investments. The board of directors has appointed three of its members to an investment committee that advises on regular adjustments to the strategy and any potential new areas for investment.
- The executive management board carries out the tactical asset allocation decisions across the main asset classes. They further decide on which financial instruments may be utilized for managing currency and market risks.
- The investment team is responsible for implementing all investment decisions, for the other routine investment activities, and for selection and cooperation with our external asset managers.
- The strategic investment horizon is effectively 'infinite’ in practice.
- Strategically, Realdania perceives itself as an investor in equities, and this is reflected in the strategic risk tolerance (i.e. the framework for maximum market risk).
- The long-term goal for equity development and thereby the commercial investment wealth is based on the inflation-adjusted capital based on the level on 29 September 2000.
- We have a risk approach to investing our non-philanthropic investment assets. This means that our strategic risk tolerance is the basis for the returns on our non-philanthropic investment assets, not the other way around.
- The budgeted level of philanthropic grants is set based on the long-term expected returns. The current budget for philanthropic grants and investments is DKK 500-600 mill. (app. EUR 65-80 mill.) per year. The level of grants is adjusted regularly, but the aim is to maintain a stable minimum from year to year.
The strategic investment universe is divided into eight main asset classes as illustrated in the figure below.
