Issue 3, 2019

Malene Bason, founder of Future Impact, helps investors navigate the emerging and complex field of impact investing. Recognizing its overlap yet distinct difference from ESG integration, she emphasizes that impact investing focuses on companies or organizations intentionally generating positive social or environmental effects alongside financial returns, measured through frameworks like the impact multiple of money. Malene notes that current challenges for investors include limited product availability, difficulties in manager selection due to lack of standardized data, and questions around performance. She encourages cautious, phased entry into impact investing while stressing the importance of clear definitions and practical measurement tools.

Patrick Houweling, lead portfolio manager and researcher at Robeco, discusses the practical challenges of factor investing in credit markets, such as poor market liquidity, high transaction costs, and difficulties in harvesting momentum factors objectively. Robeco uses equity market performance as a proxy for credit momentum due to complexities in corporate bond pricing and data issues, supplementing rigorous human oversight of data and liquidity considerations. Patrick also highlights innovations including portfolios optimized for Solvency II capital requirements and advocates a blend of quant and fundamental active managers for diversification, while recognizing ongoing research is critical given the evolving nature of factors in credit investing.

Christian Lindstrøm Lage, CIO at PFA Asset Management, reflects on the importance of how investors respond to investment decisions, not just the errors themselves, underscoring the psychological aspects and need for organisational prioritization in managing brilliant ideas amid limited resources. He highlights PFA’s strategic decision to allocate to risk rather than capital, the integration of sustainability in the investment process, and the challenge of finding attractive returns amid low interest rates. Christian emphasizes the value of a focused, stable investment philosophy and the social responsibility underlying PFA’s management of pensions for 1.3 million Danes.

Finally, the 12th annual Nordic Fund Selection Forum held in Stockholm gathered Nordic asset owners and selectors to discuss themes including equity market dynamics, ESG integration, impact investing and asset allocation. Speakers highlighted market dispersion driven by disruption, the importance of quality governance in ESG, the challenges of managing client expectations amid short-term volatility, and the need to balance conviction with pragmatism in portfolio construction. The event underscored the increasing sophistication and evolving approaches of Nordic investors navigating complex markets and sustainability mandates.

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Table of content

Introduction to Nordic Fund Selection Journal Issue 03, 2019

Overview of developments in Nordic hedge fund governance, alternative risk premia strategies, and impact investing. Highlight of ongoing political debates affecting sovereign wealth fund governance and changes in AP funds’ investment rules.

Northpeak Governance: A New Nordic Approach to Hedge Fund Governance

Insights into Northpeak Governance, a Finnish venture focusing on ESG and governance in hedge funds. Discussion on the importance of board composition and regulatory scrutiny in hedge fund governance.

Sweden’s Lynx Asset Management Embraces Machine Learning

Details on Lynx’s expansion from a single managed futures strategy to new funds incorporating machine learning models for risk-managed returns. Exploration of ESG policies within quant funds.

Fundrella: Addressing the Fund Reporting Challenge

Introduction to Fundrella, a platform aiming to centralize and streamline fund report distribution, reducing inefficiencies and improving access for investors and selectors.

A Guide to Responsible Investments in Nordic Context

Discussion on a comprehensive Finnish publication covering theories and strategies of ESG investing with case studies of Nordic and international pension funds. Emphasis on evolving investor expectations and corporate governance.

Alternative Risk Premia Strategies Under Scrutiny

Examination of Nordic investors’ experiences with alternative risk premia strategies including performance challenges, increased regulatory burdens, and evolving implementation approaches emphasizing tail risk over correlation.

Interview: ATP’s CIO Kasper Ahrndt Lorenzen on Smart and Sustainable Investing

Presentation of ATP’s integrated ESG and factor-based investment approach, reallocation from long/short to smart-beta strategies, and organizational changes to enhance portfolio construction and governance.

Emerging Market Perspectives: Mark Mobius’ New Venture

Insights from Mark Mobius on his transition from Franklin Templeton to launching Mobius Capital Partners with a focus on small- and mid-cap frontier and emerging market equities and governance improvement.

Apotekets AB:s Pensionsstiftelse: Hedge Fund Success and Cat Bond Challenges

Analysis of a Swedish corporate pension fund’s hedge fund portfolio build-up, successes with hedge fund allocations, and troubling losses in catastrophe bond investments prompting strategic reconsideration.

Bridging the Knowledge Gap within Impact Investing

Exploration of challenges and opportunities in impact investing as shared by Malene Bason, emphasizing education, market maturity, performance expectations, and the distinction between ESG and impact investing.

In Conversation: The Challenges of Factor Investing in Credit Markets

Discussion with Robeco’s Patrick Houweling highlighting the complexities of factor definitions, liquidity and turnover constraints, momentum measurement difficulties, and the importance of integrating human oversight with quantitative models.

Nordic Fund Selection Forum 2019: Summary of Discussions and Themes

Summary of the 12th annual forum proceedings including themes on manager selection, ESG integration in fixed income, and digital transformation impacting investment professions.

Roundtable: Equity Investing in Nordic Markets

Summary of a roundtable debate with Nordic investors covering market outlooks, geographic and sector opportunities, factor exposures, ESG integration, geopolitical risks, and the importance of stock-picking in current markets.

Up-Close and Personal: Interview with Christian Lindstrøm Lage, PFA Asset Management

Personal insights from PFA’s CIO on navigating investment challenges, organizational change, sustainability priorities, and balancing long-term client commitments with market realities.

Editorial and Publishing Information

Information about Nordic Fund Selection Journal’s editorial team, publishing schedule, upcoming events, and contact details for further engagement.