How our Portfolio Managers select Danish equities

A great deal of preliminary work is carried out before asset managers in the equity fund Danske Invest Denmark select their equities. Here are some of the prerequisites that have to be met before an equity finds its way into the portfolio.

Most important of all, the equity has to be Danish 
Danske Invest Denmark is an actively managed fund composed solely of Danish equities. This means all equities in the fund have to be Danish. At the moment, investors can choose between 133 different Danish stocks on the Copenhagen stock exchange, plus there are a small number of Danish companies listed on foreign stock exchanges.

Then the equity has to be a winner …
Our asset managers primarily focus on two types of equities. The one type we find among the winner stocks. These are companies that have successfully driven a healthy and dynamic business for decades. They are characterised by having a strong and stable management team with a forward-looking strategy. These companies have typically specialised in an area where they are world leaders. These are also the types of equities that provide a solid foundation for the portfolio when market turmoil erupts.

… or look set for a positive change 
The second type of equity in the portfolio is companies that look set to undergo a positive change. All listed companies in Denmark are carefully vetted by our analysts. Nevertheless, a company’s potential is not always reflected in the share price. That is why the team always spends a lot of time localising unfulfilled potential and upcoming events that might cause the share price to rise – in other words, so called triggers or catalysts that are primed and ready to go.

The equity also has to be available at an attractive price …
Our asset managers only invest in equities that have a solid price potential. Hence, it is important that the equity is trading at a reasonable price that allows room for future price increases. Here, the asset managers use their own forecasts, which are based on a comprehensive analysis of the company and the market. Managers always take a long-term view and consider the price potential several years into the future.

… and should be readily saleable again 
Managers also ensure there is adequate liquidity in the equity – in other words, that the equity is extensively traded on a regular basis. This means the asset managers will be able to sell the equity again when they wish to do so, and usually implies the companies have to be of a certain financial size. There are currently around 50 companies that meet this criterion.

A full understanding of the risks in the company is vital 
The asset management team spends just as much time localising the weak points in a company as the strong points. The aim here is to minimise the risk of a sudden loss in value. This is also where the company’s level of responsibility and sustainability are determined and held up against Danske Invest’s benchmarks.

Danske Invest Denmark in brief
Danske Invest currently offers two actively managed funds with Danish equities. Both funds are managed by an experienced portfolio team under Jesper Neergaard Poll, who is Chief Portfolio Manager.


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