Issue 5, 2024

The Nordic Fund Selection Journal's 2024 issue presents comprehensive insights into institutional investment trends and strategies within the Nordic region, emphasizing alternative assets, sustainable investments, and economic challenges. Key interviews include Jakob Carlsson, CEO of Länsförsäkringar Liv, who discusses the Swedish pension company’s recovery path marked by improved solvency, a strategic shift away from emerging markets due to ESG concerns, and a disciplined approach to portfolio risk and rebalancing. Another crucial perspective comes from Risto Murto, CEO of Finland’s Varma, who addresses Finland’s sluggish economic growth post-2008, focusing on labor productivity, innovation, and scaling unlisted companies, as well as exploring the country’s opportunities in green investments and AI. Pensam, a Danish pension company, is highlighted for its innovative partnership approaches to private equity in the US and Europe, notably emphasizing co-investments to achieve cost efficiency and proximity to managers, alongside the establishment of a dedicated co-investment vehicle in private credit.

The publication further delves into the growing appetite for alternative assets among Nordic institutional investors, framed by discussions with HSBC and JPMorgan Asset Management on asset allocation drivers, definitions, liquidity challenges, and benchmarking in private markets. It also reports on strategic collaboration initiatives like that between Danish asset managers Qblue Balanced and Copenhagen Infrastructure Partners which aim to bridge liquid and illiquid investment spaces, leveraging semi-liquid products to expand investor access. Additional coverage includes reflections from the PRI in Person conference, spotlighting climate risk, impact investing, and ESG integration as central themes. The Journal captures perspectives from industry leaders such as Eva Halvarsson, CEO of Swedish pension fund AP2, on leadership and sustainability challenges, and Karolina Qvarnström on the evolving role of manager selection amidst industry changes and the rise of in-house management. Overall, the issue encapsulates pivotal themes shaping Nordic institutional investing: the prioritization of sustainability, innovative alternative asset management techniques, and the intersection of economic trends with long-term investment strategies.

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 and Interview Highlights

The issue opens with an editorial by Caroline Liinanki reflecting on the Nordic institutional investors’ increased allocations to alternative assets. The main interview features Jakob Carlsson, CEO of Länsförsäkringar Liv, who discusses the company’s long journey to regain a solid solvency position, portfolio rebalancing during market downturns, and the current avoidance of emerging markets due to ESG considerations and return expectations.

News Analysis: Nordic Asset Management Innovations

Denmark’s Qblue Balanced and Copenhagen Infrastructure Partners (CIP) have entered a strategic partnership to bridge the gap between liquid and illiquid investments. This collaboration aims to develop semi-liquid products that provide liquidity buffers and FX hedging, catering to institutional and high-net-worth investors. Additionally, PRI in Person 2024 reflections capture evolving ESG investment trends, emphasizing climate action, social justice, corporate accountability, and the growing normalization of impact investing across asset classes.

Finnish Economic Growth Challenges

Varma’s CEO Risto Murto shares insights from his new book analyzing Finland’s sluggish post-2008 growth, lagging Nordic peers in GDP per capita and labor productivity. Key themes include innovation, R&D investment, workforce structure, and venture capital dynamics. Murto highlights the role of pension investors in financing technology and green transition initiatives and leads a government-appointed expert group to design actionable growth policies.

Länsförsäkringar Liv: Recovery and Strategic Shifts

Jakob Carlsson details Länsförsäkringar Liv’s shift from high-guarantee legacy products toward more flexible offerings with lower guarantees but higher expected returns. The company strategically reduced fixed income allocations, embraced internal risk measurement models, divested from emerging markets due to ESG and return concerns, and established a leading green bond allocation, emphasizing science-based sustainability investing and active portfolio rebalancing during market downturns.

Perspectives on Alternative Assets: Drivers and Definitions

Senior leaders from HSBC Asset Management and JPMorgan Asset Management discuss drivers for increased alternative asset allocations including yield search, diversification, market structure changes, and sustainability imperatives. They define alternatives broadly as illiquid private equity, private credit, real assets, and hedge funds with nuanced takes on liquidity, complexity, and fee considerations. The discussion underscores the importance of comprehensive due diligence, liquidity management, and alignment with investors’ strategic objectives.

Investor Focus: Pensam’s Partnership and Co-Investment Approach

Danish pension company Pensam elaborates on its increasing allocation to private markets, notably via partnerships with US-based Churchill and Australia’s QIC to access private equity co-investments efficiently and cost-effectively. Pensam also explores private equity continuation vehicles to capture liquidity-driven opportunities and has innovated by creating an in-house co-investment vehicle to streamline private credit investments, reflecting a disciplined approach to manager selection and portfolio construction.

Listed Asset Strategy at Pensam

Pensam’s shift to predominantly passive management in listed equities and fixed income aims to reduce costs and focus resources on alternative assets. The company prioritizes well-chosen benchmarks with integrated climate risk considerations and maintains concentrated external manager relationships for simplicity and fee efficiency while carefully monitoring portfolio risks of passive fixed income exposures.

Selector Insight: Karolina Qvarnström on Manager Selection

Karolina Qvarnström reflects on her 17-year career at Länsförsäkringar, underscoring the value of integrity, clear evaluation frameworks, and collegial challenge in manager selection. She advocates for embracing diverse investment philosophies within sustainable frameworks and highlights the evolving role of manager selectors amid shifts to insourced asset management. Her insights stress the need for collaboration, rigorous due diligence, and nuanced sustainability integration.

Nordic Fund Selection Forum 2024 Highlights

Key presentations from the forum include discussions on managed futures as a low-correlation hedge, innovative ESG integration in emerging market sovereign debt focusing on governance and social factors, systematic equity investing with dynamic style allocation, and earnings surprise-driven global equity strategies. The event promotes knowledge sharing on fund manager selection and operational due diligence amidst evolving market environments.

Up-Close & Personal: Interview with AP2 CEO Eva Halvarsson

Eva Halvarsson shares insights on her leadership style emphasizing openness, joy, and courage, and reflects on challenges as a young board member early in her career. She discusses the importance of integrating ESG holistically, addressing climate and social risks pragmatically, and expresses concerns about the government’s review of the Swedish AP fund structure. Personal interests and recommended podcasts round out the profile.