Chaired by Financial Times Group journalists, the invitation-only FT Investment Expert Stockholm invitation only conference will gather CEOs, CIOs and portfolio managers from Sweden's leading asset owners to share their insights into how they plan to be creative in their search for returns.
Investment Expert Stockholm 2017
Repositioning Portfolios to Generate Returns
Achieving the right balance between risk and return is a top priority for investors in 2017. The policies of the new US President, Brexit as well elections across Europe, and an uncertain outlook for interest rates are major factors reshaping global allocations. As the unending search for yield continues, which asset classes will deliver and which investment strategies will prove most effective in the next 12 months? Join leading Nordic pension funds, insurers and sovereign wealth funds who will gather at Investment Expert Stockholm to discuss how to navigate this new world for investment.
- How do investors view the Trump era – will the promise of US growth materialize amid all the uncertainty and which sectors will see the best returns?
- Is now the time to reduce investment in Europe as it faces a post-UK EU and changing political dynamics in key member states?
- Active, passive or somewhere in between?
- How should institutions reposition their portfolios to manage the challenges and capitalize on opportunities in fixed income, equities and emerging markets?
This landmark invitation-only event in the Nordics investment calendar will be chaired by Financial Times Group journalists who will debate the unpredictable year ahead with CEOs, CIOs and portfolio managers from the region's leading asset owners. We hope to see you there.
Agenda - 18th Oct
8:30amRegistration and Networking
Miles Johnson, Capital Markets Editor, Financial Times
9:10amKeynote Opening Address
Henrik Braconier, Chief Economist, Swedish Financial Services Authority (Finansinspektionen)
9:40amCIO Panel: Adjusting to a new investment landscape
With fast changing political dynamics dominating world markets, the horizon for yield is more unpredictable than ever. How are investor attitudes to risk and opportunity changing against the background of fiscal and monetary stimulus in the US, ongoing Brexit negotiations and an uncertain outlook for Eurozone economies? To what extent should institutions consider rebalancing their portfolios in favour of unconventional asset classes like infrastructure, property and alternative credit? Will diversification prove to be the saviour in uncertain times?
Mårten Lindeborg, CIO & Deputy CEO, Tredje AP-fonden, AP3
Richard Gröttheim, Chief Executive Officer, AP7
Mikael Angberg, Chief Investment Officer, AP1
Moderator: Miles Johnson, Capital Markets Editor, Financial Times
10:20amCapturing risk premia across asset classes
Stan Verhoeven, Senior Portfolio Manager, Factor Investing & Solutions, NN Investment Partners
10:40amRefreshments and networking
11:00amAlternative structured credit
Following the global financial crisis, the resulting barrage of regulatory changes, bank deleveraging and retrenchment of capital markets has opened up opportunities for institutional investors in private asset-based loans/debt. For sophisticated investors with a tolerance for illiquid investments, these opportunities may offer greater scope for investors to tailor their investment profile around specific liability, regulatory or risk-return requirements. Carefully structured investments in this sector can also be a source of alpha and help investors to diversify their portfolios. This session will discuss case studies to provide an introduction to the re-emerging asset-backed securities market.
Jason Cameron, Senior Portfolio Manager, Insight Investment
11:20amPanel: The outlook for credit markets – is now the right time to take on more risk?
Diverging central bank policies, fiscal stimulus in the US, and the looming return of inflation are all leading to uncertainty across fixed income markets. What is the outlook for rates in key economies and how are investors preparing? Where are the investment opportunities likely to be in the next 12 months? How attractive are higher yielding assets including emerging market bonds and inflation linked funds in the current market, and how are they performing?
Jakob Carlsson, Chief Financial Officer, Länsförsäkringar Liv AB
Marie Giertz, Chief Investment Officer, Kåpan Pensioner
Casper Hammerich, Principal, Kirstein A/S
Moderator: Pádraig Floyd, Financial Journalist
12:10pmInvestor Keynote: Regulation and return
Magnus Billing, Chief Executive Officer, Alecta
1:40pmSustainability within alternative assets: Greenwash or innovation
Is the perception true that alternative assets are complex, difficult to understand, and challenging to evaluate for investors? How do asset managers within the space address transparency in the investment chain, and expectations from asset owners asking for an integrated perspective on sustainability in asset management? Ulrika Hasselgren will share findings from the recent study ‘Sustainability within Asset Management – focus on Alternative Assets’, commissioned by Swedish asset owner KK-stiftelsen (The Knowledge Foundation), written by Ulrika Hasselgren and Emma Sjöström.
Ulrika Hasselgren, Managing Director and Global Head of FI Strategy, Institutional Shareholder Services
2:00pmPanel: Beyond the headlines - taking the long view on emerging markets
Caution remains the watchword for emerging markets as volatility hovers on the horizon, influenced by questions over global trade, a stronger dollar, potential interest rate increases and geo-political developments. But are investors too pessimistic about the prospects for this key asset class or will opportunistic investments generate returns? Where are the buying opportunities in emerging market debt and equities and how can institutions weigh up the fundamentals, valuations and concentration risk? Hard currency or local currency – what is the best strategy going forward?
Lena Sellgren, Chief Economist, Business Sweden
Karen Lam, Senior Client Portfolio Manager, Emerging Market Corporates, Pictet Asset Management
Rupert Watson, Head of Asset Allocation, Mercer
Moderator: Owen Walker, Commissioning Editor, Special Reports, Financial Times
2:40pmGlobal trends in institutional ETF trading
How do institutions evaluate ETF liquidity across asset classes and how much are they trading? Who are they executing orders through and using which methods? What ETFs are seeing the most use? This session will also introduce the results of a global ETF trading survey covering over 200 institutional investors.
Slawomir Rzeszotko, European ETF Sales and Trading, Jane Street
3:00pmThe Big Discussion: Active vs passive – how important is outperformance in today’s uncertain markets?
With long-term performance and fees both favouring passive investing, the outlook for active management is unclear. In recent years investors have piled hundreds of billions into passive vehicles in an effort to reduce costs and manage risk and return. But are they at risk of losing out on the potential to capitalise on market shifts, and the flexibility to take advantage of different investing strategies? What is the outlook for passive vs active approaches in the year ahead? How are products such as ETFs likely to perform as markets become increasingly unpredictable and the limitations of benchmarks become more apparent?
Per Lindgren, Head of Manager Selection, Skandia Mutual Life Insurance Company
Erik Kleväng Callert, Head of Investment Sourcing and Product Coordination, Nordea Life & Pensions
Magnus Danielsson, Head of Investment Management, Wassum
Georg Skare Lund, Head of Manager Selection, Storebrand
Moderator: Pádraig Floyd, Financial Journalist
3:45pmClosing remarks from the Chair and Close of conference
Mikael Angberg is Chief Investment Officer at AP1 (First National Swedish Pension fund).
Prior to joining AP1 in December 2013, Mikael spent 8 years in London where he served as Head of Nordics at PIMCO, Head of institutional equity derivatives sales at BNP Paribas as well as Executive Director for the Nordics at Goldman Sachs Asset Management. Previously, Mikael spent seven years at CERN in Geneva, the European organization for nuclear research, starting as a physics analyst and eventually becoming head of quantitative analysis and information systems for the CERN pension fund. He holds a master’s degree in applied mathematics from the Royal Institute of Technology in Stockholm.
Magnus Billing is the CEO of Alecta. Alecta provides collectively agreed occupational pensions, and is owned by approximately 2.4 million private customers and 34,000 corporate clients. Alecta’s assets under management amount to approximately US$90 billion. In 2016 Mr Billing was appointed to be member of the European Commissions’ “high-level expert group” on sustainable finance. In January 2018, the group delivered their final recommendations for “a comprehensive EU strategy on sustainable finance as part of the Capital Markets Union”, which informed the Commissions’ Action plan on Sustainable Finance launched in 2018. Prior to joining Alecta, Mr Billing was the CEO of Nasdaq Nordics, and Head of Fixed Income Nordic and Baltic Markets. At Nasdaq he previously held the position as Chief Legal Counsel and Senior Vice President of Nasdaq Group, Inc. Mr Billing has served as Director at the Federation of European Securities Exchanges, Swedish House of Finance and as an Alternate Director of the Swedish Corporate Governance Code Board of Directors. He holds a Law degree from Stockholm University.
Marie Giertz is Chief Investment Officer at Kåpan Pensioner, an occupational pension fund whose members are or have been government employees. She was formerly Chief Economist at the fund. Kåpan has about SEK80 billion AuM. She is responsible for the firm’s macro outlook and ESG strategy. Ms Giertz previously served as Chief Economist at SEK, the Swedish Export Credit Corporation, and before that Chief Economist at Länsförsäkringar AB. Prior to joining Länsförsäkringar she was a senior economist at Handelsbankens’ Economic Research department. Ms Giertz has more than 25 years of experience in the financial sector.
Henrik Braconier is Chief Economist at the Swedish Financial Services Authority (Finansinspektionen having briefing served as Head of the Financial Stability Department at the Riksbank. He also chairs the board of Knut Wicksells Centre for financial research at Lund University. Between 2014 and 2017 Dr Braconier was Chief Economist and Executive Director for Economic Analysis in the Swedish Financial Services Authority. Prior to that he worked as a Senior Economist at the OECD and held different positions in Swedish government, including being Director and Head of Forecasting at the Swedish Ministry of Finance. He has also held various academic positions in Stockholm, Milan and Lund. Dr Braconier holds a PhD in Economics from Lund University, where he also conducted most of his undergraduate studies.
Erik Kleväng Callert is acting Group Chief Investment Officer at Nordea Life & Pensions, responsible for the €45 billion balance sheet managed by the firm’s entities across Finland, Norway and Sweden. Prior to joining Nordea in 2017, he served as Chief Investment Officer at SPP Pension & Insurance. He has been active in the area of asset management in various positions at SPP/Storebrand, Handelsbanken, Nordea and Alecta for 23 years. He holds an MSc in Physics from the Royal Institute of Technology in Stockholm.
Jason Cameron is a senior portfolio manager in Insight’s secured finance team with responsibilities for managing structured finance focused funds. He joined Insight in January 2015, following BNY Mellon’s acquisition of Cutwater Asset Management. Prior to joining Cutwater in 1999, Mr Cameron held quantitative analyst positions at Capital Markets Assurance Corporation, Citibank and GE’s Corporate R&D Center. He has extensive financial engineering experience and holds a BA from the University of Western Ontario and an MA in Economics from the University of British Columbia.
Jakob Carlsson has been Chief Financial Officer of Länsförsäkringar Liv since 2010. Länsförsäkringar Liv is a mutual company, with a hybrid structure owned by Länsförsäkringar AB. The company manages assets of a total value of approximately SEK 115 billion, all related to traditional life insurance with a guaranteed rate of return. Mr Carlsson has more than 20 years of experience in senior positions within the Swedish insurance industry. Previous roles have included serving as Group Controller at Alecta; Head of Group Control at SPP and Handelsbanken Liv, and Head of Group Control at Länsförsäkringar AB. Mr Carlsson holds an MBA from Ashridge Business School as well as a Bachelor of Economics.
Magnus Danielsson is Head of Investment Management at Wassum which encompasses both Portfolio Management and Manager Research. He has worked at Wassum between 1998 and 2006 and since 2011. From 2006 to 2011, he was responsible for Portfolio Solutions at SEB Wealth Management.
Richard Gröttheim is CEO of the Seventh AP fund since 2010. The Seventh AP fund acts within the premium pension system, the defined contribution part of the government pension system. It is a global equity fund with 3% in private equity. Mr Gröttheim was previously Executive Vice President at the fund, a position he held since 2000. He was head of the Monetary and Foreign exchange policy department at the Swedish central bank between 1993 and 1999. He has also been chief economist at the Swedish brokerage firm Aragon Securities. Mr Gröttheim holds a BSc in Business Administration and Economics from University of Stockholm.
Casper Hammerich is a Principal at Kirstein and has been with the company since 2010. He is focused on providing operational and strategic advice to international asset management firms. His advice is based on Pan-European market coverage of Tier I and II institutions; pension funds, insurance companies, foundations, endowments, family offices and IFAs. He holds BSc and MSc degrees from Copenhagen Business School and the London School of Economics (LSE), and has held the CAIA charter since 2016.
Ulrika Hasselgren is Managing Director and Global Head of RI Strategy at Institutional Shareholder Services (ISS). Prior to joining ISS, she was CEO and co-founder of Stockholm-based Ethix SRI Advisors, which was acquired by ISS in 2015. Ms Hasselgren has advised institutional investors and asset managers in sustainable and responsible investment since 1999. In 2000, she collaborated with Sweden’s national pension fund AP7 in creating its policy for responsible investment, including the development of an innovative screening methodology. With a background in communications and management consulting industry, Ms Hasselgren spent 12 years with McKinsey & Company and three years with Solving International. She has been a guest lecturer on responsible investment at Stockholm University School of Business since 2002 and a frequent speaker at institutional investor conferences and seminars, globally. She is chair of the Luxflag ESG label eligibility committee in Luxembourg.
Karen Lam joined Pictet Asset Management in 2013 as a Senior Client Portfolio Manager in the Fixed Income Emerging Corporate team and is based in London. Prior to joining Pictet Asset Management, she was an Executive Director at J.P. Morgan Asset Management working as a global rates portfolio manager and later as a senior client portfolio manager covering fixed income total return strategies and emerging market debt funds. Previously, Ms Lam was the lead manager research analyst at J.P. Morgan Private Bank covering fixed income funds. She holds holds an MBA from the University of Chicago Booth School of Business and an MSc in Epidemiology from Imperial College London.
Mårten Lindeborg is Chief Investment Officer and Deputy Chief Executive Officer at AP3, the Third Swedish National Pension Fund, a position he has held since 2015. He joined AP3 in 2009 as Head of Strategic Asset Allocation and became Head of Asset Management in 2014. He has been in the financial industry since 1994, with a particular focus on tactical and strategic asset allocation since 1997 whilst working with Skandia and DnB. Mr Lindeborg holds a BA in Finance from University of Stockholm.
Georg Skare Lund
Georg Skare Lund serves as Head of Manager Selection at Storebrand. The position involves responsibility for manager selection for listed equity and fixed income strategies on behalf of the Storebrand Group which includes life and pension business in Norway and Sweden. Previously Mr Skare Lund has worked as managing director for Storebrand Fondsforsikring, the unit linked company of Storebrand. He joined Storebrand in 1996 as management trainee. He holds an MSc in International Management (CEMS) from HEC, Paris and Norges Handelshøyskole (NHH), Bergen. He earned a CEFA in 2005 and an MBA in Finance from NHH in 2008.
Slawomir Rzeszotko oversees European ETF sales initiatives for Jane Street. He has worked in the ETF industry for nearly a decade, including with large asset managers where he acquired an in-depth understanding of ETF trading from both a trader’s and customer’s perspective. Before joining Jane Street, Mr Rzeszotko worked at Vanguard Asset Management where he held the positions including Head of ETF Capital Markets and Head of Investment Product Specialist Group. He previously worked at BGI and Blackrock in various ETF related roles. Mr Rzeszotko holds an MA degree from the University of Wroclaw, Poland, where he went on to lecture ethics and postmodern political philosophy while pursuing his PhD studies. He is a founding member of ETF Ambassadors in Switzerland, which aims to educate and raise awareness of ETFs with the Swiss private investor community.
Lena Sellgren is Chief economist at Business Sweden, the Swedish Trade and Invest Council. She was previously Chief analyst at Nordea Markets and prior to that she served as Head of Public Finances at the National Institute of Economic Research in Stockholm. Mrs Sellgren holds more than ten years experience working at the Swedish Ministry of Finance, including as Deputy Head of Tax Policy Analysis. She has been an expert in numerous of public inquiries and has participated in several working groups and negotiations in the EU and the OECD. She has also been a board member at the Research Council of Norway. She is a member of the Advisory Board for the Forum for Global Business, and an expert for the Productivity Commission at the Chamber of Commerce and Industry of Southern Sweden. Mrs Sellgren graduated as an economist from Lund University and Stockholm School of Economics (PhD student). She also holds a degree in Civil Engineering in Urban Planning.
Stan Verhoeven is Senior Portfolio Manager in the Factor Investing & Solutions team within the Multi-Asset Boutique of NN Investment Partners. He is lead Portfolio Manager of the Multi Asset Factor Opportunities Fund and responsible for the development and management of a broad range of factor-based strategies. He was previously Multi-Asset Research Analyst at PGGM, responsible for research into alternative risk premia. Prior to that he worked at RBS in London as a Multi-Asset Derivative Structurer, and before that as a Quantitative Analysis and (Exotic) Derivatives Trader at Kempen & Co in Amsterdam. Mr Verhoeven holds an MSc in Business Administration from Radboud University, Nijmegen, and holds the CFA and CAIA designations.
Chair and moderators (3)
Miles Johnson is the Financial Times’ Capital Markets Editor. He has previously worked for the paper in various roles including its Global Investment Editor, Hedge Fund Correspondent, Madrid Correspondent, and Investment Correspondent. He has won several awards for his journalism and has featured regularly on English language and Spanish television and radio.
Owen Walker is an award-winning journalist who has covered business and investment issues in the US, UK and Europe. He is Asset Management Correspondent with the Financial Times, having previously served as Commissioning Editor in the Special Reports team. Prior to that he edited special FT publications on corporate governance, retail investment and pension scheme management. He has served as trustee on the board of the Pearson Group Pension Plan and was a committee member of the Association of Member Nominated Trustees. Owen is author of a book on activist investors, Barbarians in the Boardroom, which was published in 2016.
Pádraig Floyd is an award-winning financial journalist who writes on personal finance subjects, particularly pensions, investments and workplace savings. A regular commentator on pensions and investment issues, Mr Floyd shares views via Twitter at @gogetemfloyd, his website www.moneyjourney.net and his Linkedin profile at bit.ly/padraigfloyd. He was a member-nominated trustee director of the Pearson Group Pension Plan and is a former committee member of the Association of Member-Nominated Trustees.
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“Excellent event, great speakers, panels and discussions. Highly recommended. “ - Tony Friede, Vinnova
“Great way to interact with colleagues” - Bo Selling, Alecta
“The event to attend to be on top of investment trends.” - Lars Johan Malmstrom, ABB
“Excellent event for asset owners and investors to meet and exchange views, ideas and to be kept up to date on various relevant topics.” - Karsten Holetzek, Union Investment
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Insight Investment has built a unique investment platform that delivers outcome-oriented investment solutions. Our clients are among the most sophisticated institutional investors in the world and include leading insurers, pension funds, sovereign wealth funds and corporations. Our investment strategies include fixed income portfolios focusing on assets ranging from conventional sovereign and corporate bonds to emerging market debt and illiquid credit. Our strategies are designed to evolve dynamically to meet changing needs and stay ahead of market and regulatory developments.
Founded in 2000, Jane Street is a leading ETF liquidity provider and home to one of the largest dedicated ETF trading teams in the world. We commit our own capital and leverage our global footprint to help institutional clients buy and sell ETFs with consistently tight spreads. As a leading ETF market maker, we excel at providing liquidity in complex and difficult-to-navigate markets – even during periods of dislocation and volatility. With offices in New York, London, and Hong Kong, we trade over $5.5B of ETFs every day – over $1.4 trillion in 2016.
NN Investment Partners is the asset manager of NN Group N.V., a publicly traded company head-quartered in The Hague, The Netherlands. NN Investment Partners in aggregate manages approximately EUR 245 bln* (USD 280 bln*) in assets for institutions and individual investors worldwide, employs over 1,200 staff and is active in 15 countries across Europe, U.S., Latin America, Asia and Middle East.
* Figures as of 30 June 2017, € 51 bln relates to the AuM of Delta Lloyd Asset Management following the merger with Delta Lloyd which became effective on June 1st 2017.
AXA Investment Managers (AXA IM) is an active, long-term, global, multi-asset manager. We work with clients today to provide the solutions they need to help build a better tomorrow for their investments, while creating a positive change for the world in which we all live. With approximately $839 billion in assets under management as of the end of June 2017, AXA IM employs over 2,450 employees around the world and operates out of 29 offices across 21 countries. AXA IM is part of the AXA Group, a world leader in financial protection and wealth management.
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GAM is a leading independent asset management group focused on providing active investment solutions to institutions and intermediaries. With assets under management of EUR 119 billion, GAM employs over 1,000 people in 13 countries and is publicly listed in Switzerland, on the SIX Swiss Exchange. For over three decades, GAM has developed a comprehensive range of investment solutions across asset classes, with core capabilities in Absolute Return, Alternatives, Fixed Income, Equities and Systematic Solutions. GAM is a global firm in scale and resources yet remains nimble enough to meet clients’ needs. GAM: advancing potential.
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2016 event summary
Panel 1: Investors panel, Creativity in the search for yield
Volatility in the market has meant that investors are becoming increasingly creative in the hunt for yield. This panel discussed what strategies investors should adopt in order to produce a return on their investment, taking into account the many factors affecting the market today. The topics focussed on fixed income, SRI (social responsible investing) and ESG (environmental, social and governance) investing and hedge funds.
One participant put it simply, the ‘single most important piece of advice that you can give your clients is to keep an open mind’. The world markets are not operating the way they have done in the past so, ‘you have to re-evaluate a lot of your prior ideas’ in the pursuit of returns.
The panel discussed the number of options open to investors when choosing what asset classes to invest in within fixed income. Their overall advice was to allocate funds to flexible mandates therefore broadening their scope in terms of the instruments that could be used in fixed income and the markets. The panellists recommended, ‘taking a holistic approach to your portfolio and look where the risks are and keep in mind what you are trying to achieve for your investor’.
The discussion then explored how to find a balance between SRI and ESG standards in the search for yield. The panellists agreed that it was important invest responsibly but that there was no universal agreement on what sustainable elements should be included in a portfolio since what is right for one culture may be wrong for another. They agreed that they have the power to invest for good but at the same time in a low returns market, this may be seen as the number one priority. There needs to be a universal strategic approach on how to invest responsibility, and investors have the ability to make a huge difference.
Debating hedge funds, the panellists admitted to having positive return on their hedge funds portfolio, but all agreed that they needed to look at alternative investments. They commented on the need for investors to be selective and forensic about what they planned to achieve from their hedge fund strategy, with some panellists commenting that they preferred to invest in alterative risk premiums instead.
The conversation concluded by looking at the impact of Brexit and the US election. The markets have held better than predicted after Brexit but as one participant put it, ‘we will see a rising uncertainty but a lot of it depends on what Brexit actually looks like.’ The panel of investors agreed that being prepared and implementing careful risk management strategies would hopefully create a buffer in this currently volatile geopolitical time.
Panel 2: Emerging markets and China – still compelling investments?
The panel discussed whether the general retreat from emerging markets is justified or will the next twelve months signal a reassessment on selective returns to investors.
The discussion began with how institutional clients have reacted to volatility in emerging markets, particularly with reference to China. One panellist commented that, ‘on the whole the last few years have been great in terms of doubling the returns from emerging markets,’ with another stating they had benefitted from, ‘a rise in earnings in Asia witnessing their strongest returns this year to date’.
The panel then discussed the different strategies that they had adopted when picking stocks in China. Choosing the right Chinese stocks and knowing the market inside out is very difficult to manage from afar, so a number of the panellists have employed Asian fund managers. That way, one can better understand the market and keep track of what state owned companies are opening up to investment. One panellist stated that investing in ecommerce had provided very healthy returns. The panel identified five areas to look out for as the blockbuster trends to watch globally: security, healthcare, clean energy, ecommerce and ESG (environmental, social and governmental).
The conversation then moved onto how to integrate ESG investing into emerging market investments. The panellists agreed that this continued to be a work in progress and further research was needed in this area. One commented that they do conduct a lot of engagement but they are not yet at a point where they have a rating. The engagement is mostly done under the radar and is not covered by the media. On this topic, the panellists concluded that ‘we don’t have any good answers yet but we will get there’.
The panellists agreed that given that China is the largest emerging market, and has its own local nuances, it increasingly makes sense to be regarded as a standalone investment portfolio.
The panel then examined whether emerging and developed markets would perhaps one day converge, in terms of politics and income generation. Developed markets are playing host to increased political volatility, akin to what investors would expect in emerging markets (e.g. Brexit).
Discussion then turned to what investors were doing in frontier markets. Asked if they were looking to do more in the future, some said that this was not a priority as there were so many different investment opportunities that could be considered. However, another panellist commented that they had invested quite heavily in these markets and had a broad base, but they were not cheap and one had to be careful. The panel concluded with an agreement that investing in frontier markets was more challenging given foreign currency risk, although there were some interesting investment opportunities to be had.
Panel 3: Managing risk through diversification in alternatives, with a focus on real assets
Institutional managers are looking to alternatives – in particular private debt investments and real assets such as infrastructure and real estate – for the diversification benefit of risk reduction, and for extra return and yield in a persistent low rate environment.
The panel began by discussing the different real estate assets they have invested in within Sweden and internationally. One panellist commented on the flow institutional investors looking for assets outside their home market is currently at its highest point. Where investors are facing low yields at home, they are looking for higher yields in real estate abroad. However, one with a smaller portfolio highlighted that a way to reduce risk was to invest domestically in order to manage the asset directly. The panellists predicted that the UK will underperform against other types of real estate investment around the world as a result of Brexit.
The discussion then shifted to talk about sustainable investing in real estate. The panellists look for the most sustainable real estate to invest in, which in most cases are new builds with high energy efficiencies. One investor explained that they further their commitment to sustainable investing by ensuring that the value chain supplying that asset is sustainable too, for example the energy and water suppliers. These not only make the investment more sustainable but provide economic benefits too.
One panellist talked about their work in impact investing and investments in microfinance funds that benefit people in sub-Saharan Africa, South East Asia and South America, giving them the tools to start a business or invest in property. Not only does this benefit society but it meets the company’s ESG (environmental, social and governance) requirements and provides returns of around 10%.
The discussion concluded with the agreement that there is not one solution for advising investors on where the best place is to invest in real estate, since one needs to look at the individual needs; do they want a stable income, excess returns, or leverage all those different things? As one panellist bluntly stated, ‘I think there will be a lot of opportunities after the crash’.
Panel 4: Finding value in equities
In this session, institutional investors explored what they are doing to try and find value in equities and outlined the different strategies to adopt.
The discussion began with a comparison of active and passive managed assets. Investors tend to use active managed funds in emerging markets as this allows them to be selective and develop an internal view of the market. However, since the financial crisis, passively managed funds have grown in the Nordics due to their stability and cost efficiencies. One panellist highlighted that there has been a significant increase in the degree of internalisation of asset management recently within large institutional investors in the Nordics.
The debate also examined on whether Swedish investors are concerned about the cost of equity management and the underperformance of some equity managers. One panellist confirmed that the government is suggesting a rationalisation of funds to reduce costs particularly for public funds, or APs, as they are referred to in Sweden.
The panel debated the benefit of having a concentrated portfolio of global stocks, ensuring that managers do not spread their investments too widely and enabling them to have greater control of their investments. This business model means that there is greater confidence in the management of portfolios, whilst at the same time providing further stability.
The discussion then looked at how active equity managers can combat the growing competition from passive managers. One panellist advised, ‘you need to be patient as well as focus on the long term and have a good feeling about what constitutes a good stock,’ and continued by saying, ‘do not be too afraid of losing out in the short term’. In order to maintain a disciplined approach, find the balance between long-term and short term views.
Panellists commented that lenders are also keen to know where they are investing, so there is a huge pressure to gain information from the fund managers on what sort of companies their money is being invested in and where. This has been an intense trend over the past couple of years which is likely to continue. The panel agreed that investors needed to consider carefully where money is placed to avoid a backlash not only from investors but also from the media. One panellist explained how they screen their portfolio twice a year, using an external company, in order to ensure that they manage this important issue.