Issue 1, 2021

The Nordic Fund Selection Journal issue #01 of 2021 covers a breadth of topics centered around institutional investment trends with a focus on ESG integration, alternative assets, and corporate governance models in the Nordic region. A key theme is the growing importance of collaboration and transparency in responsible investing. The PRI's chair Martin Skancke highlights ongoing challenges related to the lack of standardized ESG corporate reporting frameworks, affecting investors globally, while calling for a unified approach involving all market participants. The Nordic region’s different governance traditions and structures offer investors both opportunities and challenges in exercising shareholder influence, with notable differences observed, for example, in Nordic countries’ approaches to nomination committees and CEO roles on boards.

Among pressing regulatory concerns, Denmark’s Finanstilsynet continues scrutinizing pension funds’ growing allocations to alternative assets, emphasizing the need for rigorous valuation methods and risk management as these portfolios expand into increasingly complex and illiquid segments. Nordic asset owners are also voicing concerns about engagement practices at AGMs, especially in Denmark and Norway, where institutional investor presence is often low compared to Sweden. Interviews with CIOs such as Arne Vagn Olsen of Iceland's Lífeyrissjóður verzlunarmanna illuminate ongoing efforts to integrate ESG factors more deeply and to adapt investment strategies amidst regulatory shifts and market changes. Overall, the issue reflects an industry in transition, balancing traditional risk-return objectives with increasing demand for sustainable, transparent, and collaborative investment approaches.

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Table of content

Introduction and Market Overview

Discussion of China’s growth potential, stock connect schemes, and performance of Allianz China equity funds. Overview of the Nordic governance model and its similarities, collaboration challenges, investor coordination particularly around climate action, and Danish pension funds’ initiatives for alternative investment transparency.

Editor’s Comment: Impact of the Pandemic

Reflection on the pandemic as an opportunity for strategic projects in diversity, rating requirements, and emerging frontier asset classes like EM corporate bonds.

Danish Financial Supervisory Authority’s Focus on Alternative Investments

Finanstilsynet’s concern over pension funds’ valuation and risk management of alternative assets; findings from sector studies on repricing during Covid-19; importance of internal competencies and risk profiling improvements; ongoing work with industry associations to establish best practices and transparency.

Kirstein Consultancy and Industry Consolidation

Separation of Kirstein consultancy from its investment management sister company Spektrum via sale to Secure Fondsmæglerselskab; motives including independence and administration; the need for industry consolidation due to regulatory and operational pressures; new strategic consulting services focusing on organizational advisory, product strategy, pricing, market targeting, and ESG projects.

Investment Opportunities and Challenges in Energy Transition

Perspectives on energy transition investing from Nordic selectors and asset managers including thematic fund demand, investment purity dilemmas, balancing footprint and handprint, CO2 measurement complexities, and the necessity of integrated approaches beyond ESG scores.

Shareholder Engagement and AGM Attendance in Norway and Denmark

Challenges of limited institutional participation at AGMs, contrasting practices with Sweden; perspectives from large shareholders Folketrygdfondet and pension funds ATP and Akademikerpension on the importance of presence for shareholder democracy and company dialogue; reasons for absenteeism and calls for increased engagement.

Veritas Pension Company Headquarters Relocation

Overview of Veritas pension company’s move to a modern, flexible office space in Kupittaa, Turku; emphasis on employee involvement, environmental ratings, and improved transport connectivity; challenges faced with original building plans near cultural sites.

Chief Investment Officer Interview: Lífeyrissjóður verzlunarmanna

Arne Vagn Olsen discusses strategy and performance amid pension fund growth and Covid-19 impacts; ESG integration via MSCI ratings; Iceland’s frontier market status and capital control relaxation effects; appetite for alternative assets including infrastructure; mortgage loans as a unique asset class; challenges balancing domestic and foreign investments.

Nordic Corporate Governance Practices and Shareholder Influence

Comparative analysis of Nordic governance codes and nomination committee roles; voting practices including CEO board membership debates; institutional investor involvement in nomination committees across countries; asset owner representation on company boards with governance and remuneration considerations; foreign investor participation challenges in nomination processes.

Hedge Funds Roundtable Discussion

Investor insights on hedge fund performance and challenges through pandemic volatility; importance of clear strategy understanding; role of macro, equity long-short, and volatility strategies; ESG integration progress and regulation impacts; evolving client perspectives; digital due diligence adaptations; outlook on alpha generation and portfolio construction.

Interview with PRI Chair Martin Skancke

Discussion on global ESG reporting standardization challenges, collaboration successes like Climate Action 100+, and biodiversity concerns; PRI’s growth, governance, and membership composition; response to Norges Bank Investment Management’s critique on PRI strategy and mission; ongoing strategy development emphasizing responsible investments and impact alignment.

Profile: Marie Giertz, Chief Investment Officer at Kåpan Pensioner

Career background and insights on investment approach amid low interest rates, ESG implementation, pandemic work challenges, and portfolio diversification; personal reflections on past investment lessons and balance between professional and personal life interests.