Swedish firm hands over asset management reins
Rival Dutch firms benefit from the sale of Läbsförsäkringar’s asset management arm
F ollowing the sale of its asset management arm five years ago, Länsförsäkringar, the Swedish banking and insurance organisation, decided to outsource to external managers all its stock and bond picking as well as its currency management, explains Gustav Karner, chief financial officer at the firm, ABN Amro currently manages a total of 11bn for the Nordic institution, spread across Swedish, European and US fixed income and equity, as well as Japanese, Asian and Australian equity. A second sub-adviser, ABN’s rival group Dutch group, ING, is employed to run US equities for a total of around 300m.
The Swedish firm also purchases Asian funds from managers Martin Currie and Aberdeen, amounting to approximately 100m from each institution. And distributing funds is the path that the Swedish firm wants to undertake more in the future, says Mr Karner.
The plan, which follows a thorough evaluation of Länsförsäkringar’s cooperation with ABN Amro this year, is to close some of the segregated mandates in “efficient and well analysed markets” such as US, Europe, Sweden and Japan, where the added value is not high, and to use indexed funds for those geographical areas instead.
Mr Karner says they are now in the process of selecting managers and probably they will purchase US equity indexed funds from State Street.
“Awarding segregated mandates means much more asset administration work for us,” says Mr Karner. In Sweden, the tax of 25 per cent of the management fee that firms have to pay in case of a segregated mandate, is an additional disincentive, he says. “However, the good thing about sub-advisory is that it gives you the freedom to choose your investment style,” says Mr Karne.
“Our decision to sub-advise also depends on whether the manager we have selected has a suitable fund for our clients. If we would like to invest in Japanese equities, for example, and the manager has only funds with a tracking error different to what we require, in that case we would set up a sub-advisory arrangement.”
ET
