Monday 23 September 2019

Now is the wrong time to sell says $200bn Nordea Asset manager

Nordea Asset Management has stakes in Irish companies including Bank of Ireland
Nordea Asset Management has stakes in Irish companies including Bank of Ireland

Niklas Magnusson

The head of Nordea Asset Management, who oversees about $200bn - including stakes in Irish companies including CRH, Smurfit Kappa and Bank of Ireland - says now is the time to position investments for a recovery.

Nordea, the biggest fund manager in Northern Europe says its strategy is don't sell and don't set up big hedges against potential losses.

"We believe it's important to stay invested, and not divest or go into very defensive positions, as long as you're well diversified in these different asset classes," Christian Hyldahl, the head of the asset management unit, said last week.

There's no reason to panic about China, which is likely to come through the current turmoil "in a reasonable way," Hyldahl said. The US is "doing very well" and "even within Europe, we see some positive signs." Given the enormous stimulus program flowing from the ECB, monetary policy "will go a long way to support the growth in Europe" and "make sure it doesn't stop," he said. The outlook for the global economy may not be "fantastic" but things now "look OK."

Nordea's investment strategy has been attracting clients, with net inflows hitting 10pc last year. It targets growth of 5pc a year, compared with projected industry growth of about 1- 2pc, Hyldahl said. Part of that client influx is due to the low interest-rate environment in Europe as "investors are seeking new ways of getting returns as an alternative to having money in bank accounts," he said.

"The history of many bank-owned asset managers has been that we've been captive and very reliant on the internal clients," Hyldahl said. "But this year is the first year when we have larger flows from external clients than from internal clients."

"The low-yield environment is here to stay for a long while, at least in Europe," Hyldahl added. "One note relevant to make is that the experiment of central banks, quantitative easing, and the usage of central bank balance sheets to buy debt has not been done before, we haven't seen the consequences of that before," he said.

"That is a concern, that we don't have the historic benchmark for how that plays out, but as it looks right now we are confident that it's actually going to be a reasonably successful experiment."

Nordea now has a market share of about 3pc according to Broadridge's ranking of pan-European fund sales, which excludes money market funds, up from about 1.5pc a year earlier.

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