FINANCIAL INVESTMENTS (INVEST)
LUNDBECKFONDEN ANNUAL REPORT 2021
20
FINANCIAL INVESTMENTS (INVEST) Invest generates returns with the primary purpose of securing sufficient reserves to protect the long-term ownership of the Foundation’s subsidiaries and to maintain grant-making activities. The financial investments are spread across a diversified investment portfolio.
INVESTMENT STRATEGY
2021 was a solid year for risk assets due to the global reopening of
following a prosperous 2020. In addition to returns from the
societies and the recovery of economies following the onset of the
underlying equity portfolio, call options on the European equity
Invest entered 2021 with a ‘pro risk’ mindset, supported by the
COVID-19 pandemic. Invest was well positioned for this scenario
market, which were bought in anticipation of rising markets,
sentiment surrounding the ongoing global reopening, an
and delivered the strongest result ever, with a return of 23%.
contributed positively.
expectation of strong earnings growth, and attractive
The world economy recovered rapidly in 2021 and, in stark
Private equities generated the highest percentage return, at
date, the investment strategy has been moderately offensive
contrast to the pandemic-led ‘supply shock’ recession of 2020,
49%, as a strong exit strategy, combined with generally good
despite prospects of higher inflation and interest rates. Invest
experienced a ‘positive demand shock’, which disrupted global
earnings performances from underlying portfolio companies,
remains focused on a balanced approach to risk, quality and
supply chains as the pandemic turbocharged demand for goods.
contributed to a highly satisfactory performance.
valuation as it focuses attention on companies with secular
investment opportunities within both equities and credit. To
The situation was exacerbated in many industries due to
growth – i.e., driven by forces that will likely be in place for an
semiconductor shortages and a structural undersupply in the
Real assets, including real estate and woodland, generated the
transport and logistics sector.
second-best return, at 48%. The robust real estate market in
extended period of time.
Copenhagen, with few idle properties and increasing property
Long-term results for Invest remained strong, with returns of
Inflation rose significantly due to strong demand, lack of supply
prices, resulted in a high return in Obel-LFI Ejendomme A/S. The
16.1% and 11.9% over three and five years, respectively, both of
and rising energy and raw material prices, among other factors.
woodland investments of LFI Silva Investments A/S also
which are well above the benchmark. This provides a firm
Part of the rise is likely to be temporary, but long-term inflation
performed strongly, supported by rising timber prices and
endorsement of the current investment philosophy and the
expectations increased, as did bond yields.
increasing demand for woodland from investors seeking suitable
strategy of investing in high quality companies across asset
investments and inflation hedges. In 2021, Invest increased its
classes with a view to generating an attractive long-term return.
The Foundation’s financial investments generated a very satis-
woodland investments by investing in the specialised
factory return of DKK 4,608m versus DKK 1,244m in 2020.
management company Cresco Capital Services A/S.
The return was mainly driven by listed equities with additional significant contributions from private equities and real assets.
Credit also performed well, with a return of 13%, despite rising
INVESTMENT PORTFOLIO Market value (DKKm)
Return (%)
interest rates. Better credit fundamentals, due to the reopening
Assets
RETURN ON THE INVESTMENT PORTFOLIO
of societies, supported the performance of both listed and
Bonds and liquid funds
3,131
3,939
-0.5%
Listed equities generated the highest absolute return, at
unlisted credit.
Credit etc.
3,599
3,373
13.1%
0.2%
Listed equities
13,465
10,945
28.7%
11.9%
Private equities
2,271
1,159
49.3%
3.5%
Real assets
1,662
1,119
48.3%
5.0%
24,128
20,535
23.5%
6.4%
DKK 3,112m. The investments in the consumer discretionary sector, which includes luxury goods, auto and retail, brought the
In 2021, the expense ratio (including management fees)
largest absolute return, with financial sector names also
declined to 0.18% (0.37%) mainly reflecting lower payments of
contributing. Meanwhile, green energy stocks fell in 2021
performance fees.
Total
2021
2020
2021
2020 0.4%
