When U.S. tariffs began sending shockwaves through global markets, Anja Mikus, the chief investment officer and chief executive officer of the $29.93B (€25.52B) KENFO, Germany’s sovereign wealth fund didn’t flinch.
“We shifted U.S. treasuries into German federal bonds,” said Mikus, in an exclusive interview with Markets Group. “But we haven’t made dramatic changes. The real story is diversification.”
That mindset defines how she invests — steady and forward-looking. In the current environment, her strongest conviction lies in infrastructure. “We’re sharpening our focus on digitization, transport, mobility, energy transition, and social infrastructure,” she added. “Data centers, fiber networks, power grids — those are the kinds of assets we find attractive.”
Established in 2017, KENFO — officially the “Fonds zur Finanzierung der kerntechnischen Entsorgung” — is the country’s first and only sovereign fund, created to finance the interim and final storage of radioactive waste from Germany’s nuclear industry. It was originally funded by operators of Germany’s nuclear plants; however, soon after the 2011 Fukushima disaster, Germany’s government passed a law that phased out nuclear power in an effort to avoid a similar disaster, according to reporting by CNBC. As of April 2023, the country seized producing any electricity from nuclear power plants.
As a result, KENFO is a limited-term fund that is expected to last until the end of the century. Until then, it continues to provide the German government hundreds of millions annually and operates under the legal supervision of the Ministry for Economic Affairs and Energy.
Mikus joined KENFO at its inception. “We started with a team of three,” she recalls. “My top priority was to hire investment professionals and develop a strategy aligned with our long-term obligations.”
The strategy began with a full asset-liability study and eventually led to the development of the global, multi-asset management platform KENFO is today — a structure that could potentially manage other federal assets in the future.
Private markets — investments plus commitments — currently account for 24% of KENFO’s total portfolio. By 2028, this share will rise to around 30%, said Mikus. Within private markets, infrastructure now carries a 12% target allocation within KENFO’s portfolio, with roughly two-thirds in Europe, a fourth in North America, and 10% in Asia-Pacific. For now, the fund is leaning more toward the eurozone to reduce currency risk, but the CIO noted that could change as U.S. assets are currently 12% cheaper in Euro terms.
Private equity has also been a focus for the fund — currently it has a 7.5% target allocation. “We’re well diversified across software, health care, and industrials,” said Mikus, noting the portfolio is focused on mid-market buyout funds and spreads across roughly 65 strategies. “We don’t do large single fund allocations.”
Venture capital; however, remains limited. “We need liquidity for payouts,” said Mikus. “And venture requires longer capital appreciation periods. We’ve been cautious.”
Instead, Mikus is focused more toward secondaries, as they offer more flexibility. “They’re highly diversified, and we’re seeing attractive entry points. We’re buyers — for now. But we’re preparing to become sellers eventually.”
KENFO approaches listed markets with similar pragmatism. “We don’t replicate the MSCI World,” said the CIO. “Instead of 70% U.S., we go 40% Europe, 40% U.S., 20% the rest. That gives us more balance.”
Emerging markets make up 13% of the portfolio, mostly in equities and bonds, with Latin America at roughly 20%, Asia 15%, and eastern Europe at 20%. Most of its allocations in the fixed income space are in hard currency. “FX volatility is not so much an issue for a long-term equity investor, but we hedge our fixed income exposure.”
KENFO recently launched an internal AI initiative, exploring how to best leverage these tools in the investment process and to support internal research. It’s also training employees on using AI to help generate data for reports.
“AI is not an asset class,” said the CIO. “It’s a tool. We’re using it internally right now mostly for daily productivity use cases, but we analyze and plan to implement a range of AI-tools in the future to make our organizational and investment processes even better and more efficient.”
Still, she’s cautious on hyping the technology. “It’s too early to say which companies will win because of AI. It will transform every area of the economy — but for now, we focus on long-term strategy, not short-term tech bets.”
