The second Nordic Investment Managers Forum has gathered five key groups – Danske Invest, DNB Asset Management, East Capital, Origo and Sparinvest – to discuss topical investment themes in front of an audience of some 100 investment professionals in Luxembourg.
The Nordic Investment Managers Forum in Luxembourg has been developed as a platform to deliver new ideas to local investors – including ideas on local asset classes such as Danish mortgage bonds.
Moderated by Jonathan Boyd, editor of InvestmentEurope, the event started with a global outlook, including a particular analysis of the impact of China in the current environment.
Kim Asger Olsen, managing partner of Origo, spoke about the impact of China on the global economy, amid concerns its rate of growth has slowed
“China is growing and is now the world’s second largest economy. So logically, what goes in China is increasingly important for the rest of the world. But China is still badly integrated in the international economy. It means that the effects of the economic changes are harder to predict,” said Olsen.
Looking for the next ‘China’ preoccupies those invested in frontier markets, and Emre Akcakmak, member of the portfolio management team for Eastern Europe and Global Frontier Markets at East Capital, took a wider view on the sector.
“Contrary to common belief, these unique opportunities, that we see in frontier markets, come with low volatility, which has consistently been lower if compared to emerging and developed markets.”
East Capital is looking to countries such as Saudi Arabia, Rwanda and Cambodia and sectors such as food and fashion retail, autos, medical care, insurance and air travel in its quest to find investment opportunities in frontier markets.
“Frontiers are the next-generation emerging markets, reforms and high growth convergence stories are taking place there where growth is supported by demographics: they represent a unique diversification opportunity.“
Drilling down further at the sector level, delegates to the forum also heard from Anders Tandberg-Johansen, DNB’s head of Global Technology Equities and portfolio manager of the DNB Technology and DNB TMT Absolute Return fund.
He talked about tech investments, but particularly the larges piles of cash that companies in the sector are sitting on, and their propensity to return this to shareholders through share buy backs and dividends. Tandberg-Johansen cited data suggesting operating profit growth of companies in the MSCI World Information Technology index are running eight times faster than global equities on average – at 16% to 2%.
“Tech is peeking into everything. There are so many good stories out there. In our investment process we are focusing on valuation and underlying cash flows,” he said.
Switching focus to a more regional asset class, Stig Brammer, product specialist at Danske Invest explained why Danish mortgage bonds are an attractive long term-investment with AAA ratings that yield 350 basis points more than government bonds.
“Danish mortgage bonds had no defaults for 218 years. Can you find me another bond market with the same track record?”
Although not immune to the global regulatory impact of regulations on repo markets, which has caused lost liquidity, the impact locally has been wideing spreads, which has served to make the asset class even more attractive, Brammer added.
Wrapping up the event, David Bakkegaard Karsbøl, chief strategist at Sparinvest and responsible for the company’s six blend funds as well as the 100% equity fund based on factor investing EQUITAS, talked about factor investing.
“The presence of factors – systematic market anomalies – has been remarkably consistent for the past century, he said.
“It is not always a good idea to be exposed to one particular factor, but investors have unambiguously benefited from being constantly exposed to several factors at the same time. Furthermore, if the investment objects each exhibit several factors at the same time, these tend to deliver even better returns.”
Presentations from the event can be viewed at www.nimf.lu.