Issue 3, 2015

The June/July 2015 Nordic Fund Selection Journal issue highlights key developments and challenges in the Nordic and global asset management industry, with a focus on tactical investing, active ownership, and fund selection dynamics. Danica Pension in Denmark is shifting toward more tactical asset allocations and a higher allocation to alternatives, responding to low yield environments by seeking inflation protection and diversification through alternatives and a tactical overlay portfolio. Meanwhile, Telia Pension Fund in Sweden is revising its strategy with a move toward risk-based allocations and increased use of passive strategies, especially for liquid assets, while grappling with challenges in fixed income management in a low-yield setting. AP7, the Swedish national pension fund, remains committed to a long-term equity-focused strategy leveraging global passive investments, complemented by tactical alpha and risk premia overlays, and is intensifying its responsible investment focus, including measuring carbon footprints and engagement on climate change.

The issue also delves into persistent debates on hedge fund fee structures and investor protection, highlighting Unigestion’s call for fairer fees and hurdle rates to align manager and investor interests. It reports on growing Nordic infrastructure investments beyond core assets into greenfield projects and liquid infrastructure, emphasizing expertise-driven, low-leverage approaches that suit long-term institutional investors. The Nordic region’s continuing leadership role in responsible investment and long-term activism is exemplified by AP4’s engagement fund investments in Japan and Europe, as well as research on the importance of patient capital in SME development and corporate governance reforms globally. The magazine concludes with discussions on fund selection best practices, the rising competition from passive strategies prompting active managers to clarify their value proposition, and advice for efficient and targeted manager meetings, all underscoring the evolving landscape of asset management in the Nordics and beyond.

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Table of content

Introduction and Industry Challenges

Overview of hedge fund fee structures and their disproportional rewarding of poor performers, leading to investor cost scrutiny. Highlight of growing tactical investment approaches across Nordic pension and asset management organizations to adapt to market conditions and improve returns.

Danica Pension’s Tactical Shift

Detailed analysis of Danica’s new investment strategy incorporating a tactical overlay portfolio, increased allocation to alternatives, and a restructuring of the investment team to improve performance and manage different risk profiles for customers.

Strategy Revamp at Telia Pension Fund

Telia’s gradual portfolio diversification away from equity risk, appointment of new managing director Claes Ahrel, and plans for strategy overhaul focusing on passive strategies, active mandates in less liquid assets, and tackling challenges in fixed income allocation amid uncertain market conditions.

Macroeconomic Signals and Geopolitics

Insights from keynote speaker Pippa Malmgren on the limitations of traditional inflation indicators, importance of protein-based commodity prices, potential geopolitical risks, and their implications for global investment strategies.

Alger’s European Expansion and ESG Integration

Recovery of US fund manager Alger from 9/11 losses, renewed efforts to expand into Europe through partnerships, challenges and opportunities in ESG integration, and strategic positioning in the Nordic and broader European markets.

AP7’s Investment Philosophy and Responsible Investment Initiatives

AP7’s focus on leveraged global equity exposure, diversified within equities with long-term investment horizon, introduction of sustainability strategies including climate change focus, and engagement in responsible investment reporting and thematic initiatives.

Infrastructure Investment Opportunities

Exploration of alternatives beyond core infrastructure, highlighting Copenhagen Infrastructure Partners’ approach to renewable energy projects with low leverage and long horizons, and Deutsche Asset & Wealth Management’s liquid infrastructure strategies for diversification and yield.

Monetising Poor Governance through Long-term Activism

Discussion on the rise of activist investment strategies targeting corporate governance improvements, examples like GO Japan fund and Swedish engagement funds, their growing role in Nordic markets, and challenges of cross-cultural engagement in governance.

Investors with a Long-standing History: Nobel Foundation and SLS

Profiles of Nobel Foundation and Society of Swedish Literature in Finland as long-term investors with distinct mandates, governance-driven asset allocation, evolving investment approaches including hedge funds and global fund portfolios, and local market biases.

Fixed Income Investment Discussions

Summary of the Nordic roundtable on fixed income covering active versus passive management, allocation objectives, liquidity concerns, risk factors including demographic trends and inflation unpredictability, and the importance of manager selection and strategy diversification.

Ålandsbanken’s Team Reshuffle and Fund Selection Strategy

Coverage of Ålandsbanken’s organizational restructuring, new leadership, updated product portfolio focusing on fundamental approaches, fund selection process across Stockholm and Helsinki, and future operational improvements.

AMF’s Enhanced Responsible Investment Approach

AMF’s adoption of MSCI ACWI ESG index as global equity benchmark, increased ESG integration, communication strategy, sector portfolio adjustments, expansion into real estate and careful exploration of infrastructure and alternatives.

Carnegie Asset Management’s Boutique Challenges

Carnegie’s focus on concentrated active global and Asian equity portfolios, the impact of growing passive inflows, fee pressures, global outreach through partnerships, and the benefits of Danish location and Nordic market leadership in pension funds.

Meetings with Fund Selectors: Best Practices

Guidance for asset managers on securing and conducting productive meetings with fund selectors and institutional investors, emphasizing preparation, relevancy, efficient communication, and client-focused collaboration.

Profile: Jeanett Bergan, KLP Responsible Investments

Portrait of Jeanett Bergan highlighting her dedication to integrating responsible investing principles at KLP, balancing ethical considerations with market performance, and managing complex dilemmas in active ownership.

Industry Events Preview: FundForum International 2015

Information about FundForum International event in Monaco, key sessions on disruption in asset management, technological trends, geopolitics, and insights from Nordic investors, alongside mention of Nordic Night and related coverage plans.