INVESTMENT POLICY STATEMENT: PENSION FUND TO DIGITAL NOMADS

This Investment Policy Statement (IPS) has been developed for a pension fund designed for digital nomads, aiming to cover 80% of pre-retirement living costs after retirement, with a planning horizon of 64 years. The fund comprises two separate portfolios: an optimisation portfolio for the first 15 years and an immunisation portfolio for the following 49 years. The optimisation portfolio is constructed using Mean-Variance Theory, with a return target of 7.12% and a risk level of 15%. This portfolio employs a negative screening process in line with socially responsible investment (SRI) principles, restricting asset selection to gold, REITs, ETFs, and equities within the US and EU regions. The portfolio covers four currencies—USD, EUR, SEK, and DKK—and features a diversified allocation of 74.08% in equities, 25.61% in commodities (mainly gold), and 0.31% in real estate investment trusts (REITs). The portfolio demonstrates risk-adjusted performance, with a Sharpe ratio of 1.21, expected return of 17.15%, and volatility of 12.32%, highlighting its efficiency in achieving the return and risk objectives. The immunisation portfolio, which covers the remaining 49 years, uses cash flow matching strategies to hedge interest rate risk. It comprises EUR-denominated investment-grade bonds with a bullet maturity structure and fixed coupon rates. The portfolio has a duration gap of -1.18 years, and selected bonds have a weighted average tenor of 24 years, a weighted average coupon of 3.32%, and a weighted average yield to maturity (YTM) of 3.34%. Overall, this IPS is designed to offer a balanced approach to retirement security for digital nomads, maximising growth while protecting against market and interest rate fluctuations.