SPP Funds, the Swedish fund provider that is part of Norwegian group Storebrand's multi-boutique model, recently reported that AUM increased 33% in 2019 compared to the previous year, as its inflows accounted for some 15% of total net inflows to the Swedish investment fund industry.
Total AUM was up some SEK19bn (€1.8bn) through the past year, taking AUM to SEK246bn (€23.2bn) by the year's end.
InvestmentEurope recently caught up with Åsa Wallenberg, CEO of SPP Funds and head of Funds at Storebrand Asset Management, to find out more about the objectives of the manager both in its home market but possibly also across Europe as part of its parent group's targets.
Q What happened last year in Sweden, ie, why did SPP Funds take such a large share of all new inflows among fund companies in the Swedish market?
A. As a group, we have worked with sustainability for nearly 25 years, and have integrated this into our asset management. However, what we did 25 years ago only partly reflects what we do today.
Significant developments have occurred, eg, in terms of data and competencies. There is a believability/credibility that we have worked with this systematically and at scale for a long time.
The trend has really been our friend and we have really taken a stand. Sustainability being more important than ever, has meant that we could take a large share of the savings this past year.
It has been a while, since the Paris Agreement was agreed upon, and the UN Global Goals global were launched, but since 2015 sustainability had great momentum.
The institutional customers also have this in their mandates, in terms of what they can invest into, thus their demand for sustainability has increased.
Also, looking at the retail side, we see that, historically, perhaps there has been an overweighting towards female clients. But the customer base overall is now recognising that sustainability is about more than about taking a stand. It is about return. And perhaps they are seeing that there are fund providers offering solutions to the global challenges.
Q. What are your expectations for this year, ie, can SPP Funds take a similar or even bigger share of new investments, both in retail and institutional markets?
A. 2019 was a good year for us, but also want to continue the growth. We need to continue sticking with our knitting.
Next steps include thinking about what can we do with our existing range, but also listening to customers what they need and want and see what we can offer. It's a combination of improving what we have as well as being innovative if necessary.
What we have said in our strategy is that we are an index aware fund provider - we cannot call ourselves an index provider since we remove companies and integrate sustainability. We will be careful in terms of doing things other than what we are good at. We have been very clear about what we are going to deliver, and very clear about where we are active - that is the Nordic market. Our funds are for example available in Finland now. The Nordic market is interesting.
Regarding the international market, that is where Storebrand's funds are to be offered. There, we are on the way; we have a platform in Luxembourg, and we have at the moment three Storebrand funds in European markets.
It's a long-term processes, but we are hopeful for our most sustainable funds; the demand for those will take off there.
But, it's not about quick processes. We will be patient.
Q. SPP Funds is one of the boutiques in the Storebrand group. How will you leverage group developments in terms of the broader EU/European market, and how will you position SPP Funds in regards to investments elsewhere in Europe?
A. What's clear in the boutique thinking is that the different offerings are clearly segregated. From outside as a customer, you should see it as building blocks, where the different boutiques can contribute to building a good overall portfolio. For example, we also have private equity, property and other alternatives.
So, as a customer, and in respect of Storebrand, it's more about different types of blocks to build a portfolio depending on needs. It's clear to us what each boutique represents.
Q. If SPP Funds grows, will you need to invest in offices, expertise and communication?
A. We can always be better at communications and those elements required to get more people to know SPP Funds and what it has to offer. But as it stands today, we have no specific plans; it's more about prioritising.
In the long term, if we needed to do anything bigger, we would. But today it is Stockholm and Oslo primarily. If there is a need or requirement for such a change, then you need to make the decision. Nothing is written in stone, but right now we have the capacity and expertise in place.
Q. You have suggested that sustainability has become the "new normal", but if that is true it is also possible to suggest that what is normal for one investor is not for another; what do you see as evidence that sustainability has thus become, and what are your thoughts on the guidelines for defining sustainability today and in future?
A. The simple answer is that it is very much about what the companies do and how they do it. The what and how provide the answers.
Is it a company that produces something that we believe in, and if so, do they pursue the business in a good way in multiple dimensions?
That generates an output, an impact, which might not be the objective of the company. We can look at that in terms of sustainability objectives - so, what and how coupled to the global objectives.
Over time this will change and develop, so we will probably see more about definitions. At the EU level, sustainable finance is being looked at. There is a lot of work on standards and clarifying what sustainability is. That is work we are going to do also.
It is important to understand the competency. There are many questions behind the high- level definitions.
Q. UN PRI has been around for 15 years, but the six principles behind PRI do not seem to have produced the action demanded by Greta Thunberg, Extinction Rebellion and other NGOs on the issue of climate change. Is there a need for a seventh principle, for example, around education of investors on sustainability matters, to speed up changes to investment mandates, and if so, would SPP Funds lend its support to such a principle?
A. Education is required across many areas. That is not going to go away; there will be a requirement for continuous education, as this area is developing ongoing. So, it would be a good idea to stay on top of this. Spontaneously, we would lend ourselves to such a principle, without knowing the details.
There is a need to ensue customers are educated, but also those meeting customers, such as analysts and fund managers. We've been doing this for the past decade. It is education at different levels, it's often discussions with customers around investment solutions, where we in a way educate.
On the retail side, the customers are primarily acquired via platforms, so we don't necesarily have direct contact with them as we do with institutional customers. For many sustainable funds and savings it has been a blind spot.
The Swedish fund market is highly developed thanks to PPM, so that all consumers have a relationship to fund-based savings. This ought to be taken advantage of with greater emphasis on educating further.
So, PPM could have a responsibility for education around sustainability. Generally, the funds on that platform are very sustainable. Now, the PPM system is subject to review to strengthen consumer protection, but there is a need to check that the proposed changes will actually work.
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