Jacob, what is your job remit?
Until recently, I was responsible for our third-party distribution in the Nordic region, a position I held since August 2008.
It has been an incredible journey and we have grown the business substantially.
We changed our organisation as of 1 September and merged our institutional distribution with our wholesale distribution, and now I am on to the next challenge as senior executive adviser to the global head of institutional and wholesale distribution.
How does the mix of assets in the Nordics vary, country by country?
The Nordics are diverse in their investments.
Denmark is a fixed income country with more than half of the fund market assets under management residing in fixed income funds.
At the other end of the spectrum we have Sweden, where more than half the assets are invested in equities.
The other markets are more or less evenly split between fixed income and multi-asset funds. In both Norway and Finland the equity part is just below 50% of total assets, and in Finland multi-assets make up around 15% of the fund market.
What is the relative importance of each of these countries to Nordea in terms of the amount of business that is generated?
In the asset management business we have widely diversified market share in the different Nordic countries, which to a large degree is a reflection of Nordea Bank’s market position.
In terms of market share our largest penetration is in Finland, where Nordea funds account for around one third of the market.
In Sweden we have just over a 10% share, and in Norway and Denmark Nordea funds we are just short of taking 10% of the market.
In total, Nordea mis the largest asset manager in the Nordics.
We have now surpassed €250bn (£199bn) in assets under management and we are one of the top 10 fastest-growing asset managers in Europe.
Characterise the distribution channels Nordea uses and the working relationships that need to be established.
Nordea Asset Management benefits immensely from being a part of the Nordea Group.
It shouldn’t come as any surprise that the lion’s share of Nordic assets under management is generated by the captive channel.
That being said, institutional and wholesale distribution is clearly gaining territory in the third-party distribution space and not only in the Nordics.
Nordea is one of only three asset managers that has appeared in the Lipper top 10 European net fund flows for each of the past three years.
Our external distribution in the Nordics is to institutions within the life and pension segment.
This has been a growing area for us but aside from the fact increasing numbers of clients trust their assets to us, we also top the Prospera ratings in many countries, showing that clients value both our products and our service.
Explain where Nordea operates around the world. Which are the priority markets?
Nordea has grown as a Nordic Bank and has the natural base in the four Nordic countries.
On the Asset Management side this has also been the case for a long time but we are in the middle of a big change now.
The institutional markets in the Nordics are very mature and, at the same time, a lot is happing in Europe and the rest of the world.
Italy, for example, is a country where the local asset management industry is very limited in the institutional space, and this makes it possible for companies like Nordea to benefit.
Our Nordic roots and our values of being transparent and honest, together with our strong financial position, is highly appreciated.
We focus on stability and Italian clients seem to like that.
We are established in all major European countries, with our own office and sales people on the ground speaking the local language.
But clients outside Europe also appreciate the Nordea brand.
We have sales on the ground in São Paolo and Brazil, and right now we are seeing a huge interest from large Brazilian pension funds after they start investing outside their home market.
Most recently we have established a sales office in Singapore to cover our activities in Asia.
We are on the platform with many of the large international wealth managers and it is important to be close to them in the markets where they are growing.
The Middle East is also very exciting for us and we do this on a fly-in, fly-out basis at the moment.
At the same time we are constantly scanning for new opportunities but it is very important for us that we enter a new market in a prudent and efficient way.
We are very cautious the operation should be meaningful for our owners.
Are you planning to launch any new products aimed at the retirement market in the next year?
We are constantly looking for solutions to our clients’ needs.
What concerns us right now is not least the low yield environment. We know that our clients are searching for yield and we will help out here.
It is easy to bring on more risk and then increase yield but this is not necessarily the best solution for all clients.
We have had great success with our stable equity concept – equity investment with two-thirds of the market risk over the full cycle – and we are also advocating a proven multi-asset solution within the stable family.
Traditionally, investors have built balanced portfolios with a fixed asset allocation, let’s say 50/50 on fixed income and equities.
The risk of the portfolio has then been an outcome of the underlying investments within that fixed asset allocation.
We think a value-at-risk-based approach to establishing a balanced portfolio is the future.
We want to create a risk-controlled portfolio that aims at having a less than 3% probability of a loss larger than 3% within three years.
With this as our guiding line in the risk control of the portfolio we form our strategic and tactic asset allocation views.
For us it is about delivering return with responsibility.
Which of Nordea’s funds are selling well and which ones are doing less well than expected?
Global Stable Equity is a top seller and our Stable Return Fund is now really getting attention, not only in the Nordics but all over Europe.
Less in demand has been traditional fixed income in the investment grade and high-yield segments, but we can’t say it is unexpected.
Clients have had a fantastic run with high yield in recent years and many see future potential as limited.
Still, the running yield is attractive and we don’t see everyone leaving the party right now, but it does seem that the cycle is coming to an end.
How is your product strategy shaping up for the rest of the year?
Both Global Stable Equity and the Stable Return Fund will be the clear focus for our product strategy.
Our North American All Cap Fund has attracted more than $3bn (£1.9bn) in assets under management during the past couple of years and I am sure we will see increased interest in the fund when we get the three-year track under our belt in spring next year.
This has certainly been true in the global emerging market sector, where our top-performing Emerging Stars Equity Fund is currently seeing strong interest, having gained the important three-year performance record this year – along with a bunch of ratings and award nominations that goes with it.
Elsewhere, we believe investors will look to emerging market fixed income and, for the more sophisticated, the bank loan products will also be of interest.
All in all there is a lot to talk about when we meet our clients.
