Questionable quality in submitted small cap tenders

In the European small-cap equity funds category there were a total of 15 submitted tenders, of which ten were from non-Nordic asset managers. Out of the 15 submitted tenders, only five made it through to the interview round – prompting us to question if this is a result of truly bad quality when it comes to investment philosophy, strategy, implementation and portfolio construction – or a result of not spending enough energy on filling in the RFP.

Only one international asset manager, JPMorgan Asset Management, got into the mix – a firm that also was selected in the first procurement of European equity funds.

The procurement will however not make a huge difference for savers on the platform. Some 99 per cent of savers are currently invested in the two largest funds (SEB Europafond Småbolag and Swedbank Robur Small Cap Europe), which will both will keep their assets. The procurement affects around 68 000 savers with total assets of SEK 5.5 billion. Three funds (Lannebo Europa Småbolag A, BL – European Small & Mid Caps B and Allianz Europe Small Cap Equity AT) were not selected and will be removed after a transition period.

The overall quality of the precured funds has increased, and the fees were pushed lower by 19 per cent to an average of 0.321 per cent.

// Selected funds

Danske Investment Management A/S / Danske Invest SICAV Europe Small Cap (New)

J.P. Morgan Asset Management (Europe) S.à.r.l / JPMorgan Funds – Europe Sustainable Small Cap Equity Fund (New)

SEB Funds AB / SEB Europafond Småbolag

Swedbank Robur Fonder AB / Swedbank Robur Small Cap Europe

// Submitted tenders

In the procurement of Swedish small-cap equity funds, the Swedish Fund Selection Agency selected ten funds where five are new to the platform. Among the new selected funds, two smaller players made the cut (Cliens Kapitalförvaltning AB and Cicero Fonder) showing that size is not a prerequisite to make it in the procurement.

Around 180 000 savers are affected and approximately SEK 34 billion of assets will be allocated to the procured funds. For managers that made the cut, this is a meaningful validation. For those excluded, the lost platform access is significant. Both Spiltan Småbolag and Carnegie Småbolagsfond A – two among retail clients’ more popular funds – where not selected. Also, while Lannebo managed to get one fund onto the platform for Swedish small caps – three other Lannebo funds (one in the European small cap category and two in the Swedish small cap category) were not selected. It should be added that they managed to keep their biggest fund on the platform.

In total, nine funds currently on the platform was not selected. Among the nineteen tenders submitted only two didn’t meet the quality criteria on the investments side.

// List of funds selected for the platform
AMF Aktiefond Småbolag
D&G Småbolag
Aktiespararna Småbolag Edge (New)
Cliens Småbolag (New)
Danske Invest SICAV Sverige Småbolag Class SI (New)
Handelsbanken Svenska Småbolag
Lannebo Småbolag
Nordea Småbolagsfond Sverige (New)
SEB Sverigefond Småbolag (New)
Swedbank Robur Småbolagsfond Sverige

// List of funds leaving the platform
Evli Sverige Småbolag
Humle Småbolagsfond A
Spiltan Småbolagsfond
C WorldWide Sweden Small Cap 1A
Skandia Småbolag Sverige
Länsförsäkringar Småbolag Sverige Vision A
Lannebo Sweden Micro Cap
Lannebo Small Cap Oppurtunities A
Carnegie Småbolagsfond A

// Submitted tenders