The board determines annually DIP's investment policy and the guidelines which the asset management is subject to. DIP is subject to the requirements of the Danish Financial Supervisory Authority, and the investment policy and investment guidelines are determined in consideration of the restrictions and directions of the Danish Financial Business Act.
The investment policy and investment guidelines are formulated on basis of the board’s approach to risk and wish for adequate risk diversification of the investments. The strategic allocation of the four asset groups Bonds, Equities, Credit bonds and Real assets is an important tool to ensure risk diversification and obtain a favourable return.
The board also determines how much the asset groups can deviate in relation to duration, distribution across countries and hedging of currency risk. Furthermore, each asset group is measured up against a defined benchmark.
DIP pursues a long-term investment strategy, and the pension fund invests actively with focus on striking a balance between high returns, appropriate risk and low costs. DIP invests according to the following three key principles ranked by importance:
- Portfolio diversification - choosing different asset types with different risk-bearing elements.
- Risk management - keeping the risk level within determined margins.
- Tactical asset allocation - identifying investments with an attractive return-risk relationship.
DIP aims at being a socially responsible investor. Ethical, social and environmental concerns are key issues when DIP invests the members’ funds.
A large part of the asset management is handled by external portfolio managers.