Danish Bonds Strategy

Mortgage bonds dominate the Danish fixed income market, the second largest covered bond market in Europe. The Danish mortgage bond market offers high security (AAA rating) – backed by the fact that there has never been cases of defaults on Danish mortgage bonds. Historically, mortgage bonds yielded a higher return than comparable government bonds.

The Danish mortgage market is characterised by many issuances with very different characteristics. The complexity of the entire mortgage market requires experienced portfolio managers and a solid Mortgage-Backed Security model to identify attractive bonds.

The strategy has a strong track record dating back to year 1994 and has successfully been distributed as both Danish UCITS and discretionary mandates.

Our philosophy is that Government Bonds, ARM’s (flex), Callable Bonds and Capped Floaters in the short term might be priced incorrectly, which opens up opportunities for attractive risk-adjusted re-turns.

For the strategy, active management is at the core of the investment process and implemented through a systematic investment process, validated models and qualitative analysis of the market. Investment decisions based on predefined processes ensures systematic decisions in order to minimize behavioural effects driven by market psychology alone.