Kenfo is a German sovereign wealth fund, which just means a government-owned investment pot. This one has a specific job: pay for the country's nuclear waste disposal. It manages more than €28 billion, or about $32 billion.
Right now, a quarter of that money sits in what are called private markets. Those are investments you can't buy and sell on a stock exchange, like real estate, infrastructure projects, and private company stakes. The fund intends to increase its private market share to 30%, up from the current 25%, within a two-year timeframe.
Why the change? The fund sees better deals in real estate and infrastructure. Verena Kempe, the head of investment management, put it simply: "We continue to see attractive returns in those markets."
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Higher interest rates have made borrowing more expensive for private companies, and artificial intelligence is shaking up software investments in ways that make picking winners harder. The fund says a more selective approach is necessary now.
Founded in 2017, Kenfo was created to manage the financial burden of Germany's nuclear phase-out, with a mandate to ensure sufficient funds for decommissioning plants and storing waste over decades. Its long-term liabilities allow it to invest in illiquid assets that may offer higher returns.
CEO Anja Mikus explained the thinking. "We have no plans to stop investing in Treasuries because they remain a very important part of the government bond market," she said. She added that the fund is taking a flexible approach. The yields help - the fund cited yields of up to 2.8% on U.S. Treasuries as attractive.
So far, the overall strategy has worked. From its inception in 2017, Kenfo's portfolio has returned 7.9%, amounting to €8.8 billion. Not a bad track record for a fund that exists to handle nuclear waste.
Kenfo was established specifically to cover the long-term costs of decommissioning nuclear power plants and safely storing radioactive waste. Its investment horizon spans decades, matching the timeline of those liabilities, which is why it can afford to take a patient, long-term approach to private markets.
The bottom line: Big funds like Kenfo are betting that private markets still have room to run, especially in real estate and infrastructure. They are also showing that U.S. government bonds remain a go-to safe haven, even with a bit of back-and-forth in how much they hold. For individual investors, the lesson is less about copying their exact moves and more about understanding the logic. Diversification across different types of assets, adjusting when conditions change, and sticking with a long-term plan - those ideas work at any size.
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