Issue 1, 2015

The Nordic Fund Selection Journal highlights evolving dynamics in the Nordic asset management landscape, focusing on the increasing complexity of institutional investing and the blurring lines between asset owners, managers, and consultants. Institutional investors like Danish pension funds are expanding allocations to alternative risk premia and infrastructure, aiming to enhance diversification and returns amid low-yield environments, while also bringing investment functions in-house to better control costs and risks. Interviews with CIOs from AP1, Lærernes Pension, and others underscore the challenges and opportunities in implementing new strategic asset allocations and organizational structures in response to regulatory changes and market conditions.

On the regulatory front, scrutiny of active fund management intensifies with concerns around "closet indexing" leading to calls for clearer definitions and possible European-level regulatory actions. Nordic investors express a commitment to sustainability issues, corporate governance, and gender diversity, reflecting broader industry trends informing AGM agendas. Meanwhile, the pivotal challenges of navigating increased fund flows, market volatility, and geopolitical risks emphasize the importance of active risk management and diversified investment strategies.

Amid market uncertainty, fund selectors report facing an overwhelming volume of sales communications, prompting calls for greater efficiency and respect for investor time. Fund groups note that new regulations like MiFID II will drive a shift toward more institutionalized distribution models, requiring recalibrated strategies for client engagement. Notwithstanding market pressures and organizational changes, Nordic firms like Skagen Funds are undergoing ownership and leadership transformations with a focus on maintaining independence and investment philosophy, while newer industry entrants diversify offerings toward more specialized and bespoke investment products.

The magazine is only available to subscribers

If you’re new to Tell Media Group, create an account first.

Read more about our memberships

Table of content

Editorial Comment: On Blurred Lines in Nordic Asset Management

The Nordic fund industry is witnessing an erosion of traditional boundaries, with players such as pension funds and consultants increasingly entering fund management. This blurring raises questions about competition, client focus, and governance within the market.

News Analysis: Institutional Investors Diversifying and Expanding Strategies

Nordic pension funds like VER and PKA are expanding portfolios with diversified strategies such as alternative risk premia, currency hedging, derivatives, and infrastructure investments. Finnish and Danish pension funds are also reassessing portfolios to achieve better risk/return balance amid evolving market dynamics.

Academic Insight: Financial Research and Its Practical Application

Collaborations with Swedish House of Finance and the Institute for Financial Research introduce new academic findings on fees, financial knowledge, and decision-making, influencing fund selection and investment strategies within Nordic institutions.

Corporate Governance Focus: Institutional Shareholders and AGM Priorities

Key governance themes include gender balance on boards, climate change, tax transparency, and corporate responsibility. Institutional investors emphasize sustainability, transparent remuneration, and independent inquiries into corporate conduct, reflecting evolving shareholder activism.

Alternative Risk Premia: Experiences from Nordic Pioneers

Nordic asset owners like PKA, AP3, SPK, and AP1 are pioneers in building portfolios with alternative risk premia strategies to achieve true diversification. Challenges include complexity of implementation, strategy robustness, need for manager diversification, and evolving terminology.

Market Outlooks: Reviewing 2014 and Looking Forward into 2015

Despite earlier expectations, 2014 saw surprising returns in bonds and equities, influenced by central bank policies and market dynamics. The outlook for 2015 includes themes such as a broadening US recovery, currency fluctuations, volatility concerns, and diverging performance across developed and emerging markets.

The Selector: Changing Role and Practices in Manager Selection

Manager selectors like Swedbank Robur adapt to increased market complexity by emphasizing qualitative research, long-term strategic allocations, and robust ongoing monitoring. Relationship management and transparency are key in selecting and retaining external managers.

Geopolitics: Integrating Political Risk into Investment Strategies

Geopolitical volatility is rising as the global order transitions to multipolarity. Investors are urged to incorporate geopolitical analysis into portfolio risk assessments, balancing risks and opportunities arising from emerging market governance, regional tensions, and evolving alliances.

Industry Dynamics: New Entrants and Changing Market Structure

Pension funds and consultancies are entering fund management, creating new competitive dynamics and challenging traditional asset managers. Investor-led innovation, co-investment initiatives, and new product offerings are reshaping distribution and governance models across the Nordic region.

Institutional Asset Managers: Trends at Skandia, Pensam, Lærernes Pension and Skagen Funds

Skandia extends its institutional offering with alternative asset funds based on direct investments. Pensam pioneers investor-centric loan funds with atypical terms. Lærernes Pension expands infrastructure allocations and internal management with alternative strategies. Skagen Funds navigates leadership and ownership changes amid fund outflows and market pressures.

Do’s and Don’ts: Managing Investor Communications in a Busy Environment

Buy-side professionals face flood of emails and solicitations. Successful communication requires targeted outreach, respect for investor time, and use of innovative filtering tools. Investors emphasize proactive, researched approaches and suggest better technological solutions to streamline fund manager engagement.

Up Close & Personal: Profile of Pia Hagen, CIO at Navigera

An interview with Pia Hagen offers insights into her career path, work preferences, and views on the investment profession, reflecting the human dimension behind Nordic asset management decision-making.

The Comment: MiFID II and Distribution Strategy in Sweden

The imminent implementation of MiFID II is driving Swedish fund companies to reconsider their distribution strategy. The regulations push firms towards institutional clients, demanding a reassessment of sales approaches and client engagement to navigate evolving compliance landscapes.

Upcoming Issues and Events

Future editions will cover fixed income asset allocation, real assets investment, and feature Nordic Fund Selection events in Helsinki, Stockholm, Oslo, and Monaco, focusing on industry trends and networking.