Issue 4, 2020

The Nordic Fund Selection Journal issue #04, 2020 covers a broad range of topics relevant to institutional investors and selectors, focusing on governance, ESG integration, innovative investment approaches, and the impact of Covid-19 on portfolio management. A significant focus is on the challenges and lessons from the Nicolai Tangen appointment as CEO of NBIM, highlighting governance scrutiny and the importance of transparent recruitment processes. The journal also discusses the new Paris-aligned net zero investment framework developed with strong Nordic involvement, aiming to offer practical guidance on decarbonising portfolios while balancing fiduciary duties. Another innovative development is the launch of AssetTelescope, an AI-driven platform designed to monitor real-time investor sentiment and detect early warning signs of fund problems, potentially helping selectors mitigate reputational risk.

The issue delves into evolving ESG practices, particularly integrating ESG criteria into executive pay, acknowledging rising interest but also the complexities and data limitations involved. It covers Swedish investors’ perspectives on climate change and asset allocation, emphasizing top-down and bottom-up approaches, physical and transition risks, and location-specific impacts in portfolio construction. Additionally, the jump to virtual work prompted by Covid-19 is explored through the Finnish pension fund Yleisradion eläkesäätiö’s experience, illustrating the digital transformation and new work practices. Finally, the journal features several in-depth interviews and conversations, including with Sampension’s CIO Henrik Olejasz Larsen on risk management and sector shifts, and Los Angeles Capital’s CIO Hal Reynolds on measuring portfolio Covid resilience via a novel Covid beta metric, underscoring the importance of dynamic risk analysis in uncertain times.

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Table of content

Editorial and Leadership Changes at Leading Nordic Firms

New appointments and transitions at Ilmarinen, PFA Asset Management, Topdanmark, and LocalTapiola Group, with key figures taking on roles focusing on ESG and responsible investments.

Challenges and Innovations in Response to the COVID-19 Pandemic

Rapid digital transformation enabling remote work at Yleisradion eläkesäätiö; challenges and measures taken to ensure continuity and efficiency amid lockdowns and travel restrictions.

NBIM CEO Appointment Controversy

Detailed account of Nicolai Tangen’s delayed CEO appointment at NBIM, conflict of interest issues, political involvement, reputational impacts, and governance debates.

Advancements in Climate Change Investment Frameworks

Development of the new net zero investment framework by IIGCC with significant contributions from Danish pension funds, aiming to bring portfolio alignment with the Paris Agreement and systematic integration of ESG.

AI-Driven Fund Monitoring and Risk Identification

Introduction of AssetTelescope, an AI platform analyzing numerous data sources to generate early warning signals on fund operational risks and reputation, enhancing due diligence processes.

Market Analysis: Distressed Debt Opportunities and Increasing Corporate Leverage

Exploration of heightened default risks due to the pandemic and the implications for investment strategies in distressed debt and special situations.

Investment Manager Selection Amid Pandemic Constraints

Debate on the role and adequacy of reference checks as substitutes for traditional onsite manager visits in operational due diligence during restricted travel and office access periods.

News Summary: Nordic Pension Funds and Asset Managers’ Activities

Highlights of fund mandates, acquisitions, executive moves, and ESG-related initiatives across Nordic investment firms.

Interview with Henrik Olejasz Larsen of Sampension

Discussion on the impact of COVID-19 on real estate investments, concerns about inflation risks, forestry investment challenges, and navigating value versus growth stock dynamics in portfolio construction.

Integrating ESG Metrics into Executive Compensation

Examination of emerging trends, challenges, and perspectives on linking ESG factors to pay structures, including shareholder attitudes, measurement complexities, and governance considerations.

Swedish Investor Roundtable on Climate Change and Asset Allocation

Discussion topics include timing and importance of climate risk integration, scenario analysis, physical and transition risks, regional factors, sustainable portfolio strategies, and the balance between normative and financial perspectives.

Investor Focus: Yleisradion eläkesäätiö’s Transition to Remote Work

Insights into the Finnish pension fund’s efforts in digital adaptation, team coordination, and operational challenges during COVID-19, highlighting increased efficiency and employee satisfaction.

Los Angeles Capital’s Innovative Covid Beta for Portfolio Resilience

Presentation on a novel factor measuring sensitivity of stocks to COVID-19 related macro shocks, enabling enhanced portfolio risk management and insight into sector and regional vulnerabilities.

Profile: Peter Elam Håkansson, Chairman and CIO of East Capital

A personal and professional overview of East Capital’s founder, his investment philosophy, career highlights, and interests outside finance including music and cultural engagement.