Denmark’s PFA is to launch a new index-based investment option for its 1.3 million customers this autumn – PFA Indeks Plus – to meet growing interest with passive investing.

The product has the same investment profiles and risk reduction as the existing PFA Plus products, PFA Plus and Klima Plus, but with a simpler investment portfolio that automatically tracks selected indices.

The provider said its new product will be cheaper than its existing investment options. The decision to launch the product was driven by increasing consumer interest in investing.

"We have seen strong demand from customers who want to invest all or part of their pension savings in an index product," PFA investment director, Kasper A. Lorenzen, said.

Although the product reuses key elements from its main offering, its portfolio and investment approach are different.

"The product design is the same, but the portfolio and investment approach are typical of an index product. This means that the investments automatically follow selected indices and that there is no active selection of equities and bonds,” Lorenzen explained.

“There is also no currency hedging of shares, and the product does not contain unlisted investments such as real estate and private equity.”

Companies included in the new product will still comply with PFA’s policy on responsible investment. PFA Index Plus will also offer rebalancing and risk reduction, which is not common for typical index products, including those already offered by PFA on its 'Du investerer' platform.

Despite the launch, Lorenzen said PFA's standard recommendation to customers will continue to be PFA Plus, as the broader portfolio is expected to generate a better return over a long time horizon.

"PFA Plus remains our recommended product,” he confirmed.

“Active management, the broader portfolio and access to unlisted assets are expected to give customers the best return in the long term – and this is supported by the assessments we have received from, for example, the Council for Return Assumptions, which is an independent council,” he concluded.

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