In "stabile" Unternehmen investieren - aber wie?

e-fundresearch.com: Mr. Claus Vorm, you are the fund manager of the Nordea 1 – Global Stable Equity Fund (BP-EUR),ISIN: LU0278529986. When did you take over the responsibility of managing this fund?

Claus Vorm: The fund was launched on 05.03.2007 since which time I have been co-managing the fund together with Robert Næss. We also manage the fund’s “big brother”, namely the Nordea 1 – Global Stable Equity Fund – Unhedged, which is effectively the same investment strategy but provides investors with currency exposure as the fund does not hedge foreign currencies back into the base currency (Euro).

e-fundresearch.com: What is the current size of the fund?  

Claus Vorm: As of end of November, we managed approx. EUR 565 mn in the Nordea 1 – Global Stable Equity Fund. The AuM of both funds (hedged and unhedged) amounted to approx. EUR 1,518 mn.

e-fundresearch.com: Do you also manage other funds or mandates?

Claus Vorm: Nordea Investment Management is among the biggest fund managers in the Nordic region with a diversified institutional and retail investor base. On that note, we also manage money for i.e. pension funds and offer our private clients Nordic-domiciled funds. Furthermore, I work together with Asbjørn Trolle Hansen and Kurt Kongsted on our balanced fund, the Nordea 1 – Stable Return Fund.

e-fundresearch.com: What is the total amount of assets you manage currently?

Claus Vorm: In total, combining all assets managed according to the Global Stable Equity and the Stable Return strategy, I and my co-fund managers are responsible for client money amounting to approx. EUR 12 bn.

e-fundresearch.com: How long have you been in the business as a fund manager?

Claus Vorm: As part of my academic career, I worked as an associate professor at the Laboratory of Actuarial Mathematics at the University of Copenhagen from 2000 to 2001. Then I joined McKinsey & Co. as a part of their financial institution division before joining Nordea Investment Management in 2004. I have been working as a fund manager in Nordea’s Multi Assets Team for more than nine years.

e-fundresearch.com: What are the main steps in your investment process and in which area is your competitive edge to add value to investors?

Claus Vorm: Our investment philosophy is grounded in the simple but powerful observation that companies that deploy their capital cautiously and grow their businesses more conservatively generally deliver comparatively stable economic results over the longer term. As a consequence, stocks of stable companies usually offer better risk-adjusted returns compared to their peers in the stock market.
The fund is benchmark agnostic; we focus on absolute stability of different fundamental stock factors, e.g. total return, price, historical earnings, EBIDTA, cash flow and dividends. The Global Stable Equities investment process utilizes fundamental factors and quantitative techniques to construct the desired portfolio. In order to be included in the investment analysis process, a stock must have at least five years, preferably ten years’ worth of historical data. Furthermore, the stock must have analyst-coverage, providing forward estimates of earnings for at least the next two years.

We start our investment process with scoring the stocks regarding the stability of the aforementioned fundamental factors. Based on a screening we then make a prospect list of 350 stocks. Form this prospect list we continuously pick the best 100 stocks based on their risk/return ratio. The assessment of the risk/return is based on a fundamental analysis of the individual companies where our conviction building is supported by our quantitative valuation models.

The fund is highly diversified given the number of stocks. In addition, the stocks specific risk is quite low as the maximum position size is capped at 3% of the market value of the portfolio. Consequently, the top 10 holdings will normally not exceed 30%.

I think the added value of the Nordea 1 – Global Stable Equity Fund is that we care about growing our clients’ wealth and thus focus on absolute returns instead of being benchmark-possessed. We employ unique analytical systems which calculate, compare and evaluate a wide range of company stability criteria. We believe that our equity selection process can generate attractive excess return without subjecting our investors to unnecessary risk.

e-fundresearch.com: Which benchmark is most relevant and how should investors compare the fund vs. benchmarks or peer groups?

Claus Vorm: The fund does not have a benchmark. However, as we invest in global stock markets, we recommend using the MSCI World Index for performance comparison purposes. Global Stable equities have an attractive beta bias: they tend to outperform the MSCI World Index in market downturns and slightly lag in strong up markets.
 
Sources: Nordea Investment Management. The performance for this composite represents all portfolios managed as Global Stable Equities. Period under consideration: 31.12.2005 – 31.10.2013. The performance represented is historical; past performance is not a reliable indicator of future results and investors may not recover the full amount invested. The Global Stable Equities Strategy does not have any official reference index. However, for comparison purposes, we have shown the MSCI World – NDR Index performance which is one of the possible benchmarks for a Global Equity portfolio.

e-fundresearch.com: Which performance did you achieve for the fund YTD and over the past five calendar years in absolute terms and relative to relevant benchmark or other reference indices?

Claus Vorm: Please find below the performance of the Nordea 1 – Global Stable Equity Fund BP-EUR versus the MSCI World Index (EUR hedged) Net Total Return. I would like to reiterate that the fund has no official benchmark, but the aforementioned index could be considered a good reference for performance comparisons.
 
*Source: Nordea Investment Funds S.A.
**Source: Bloomberg/Nordea.  Approximation of the hypothetical benchmark MSCI World Index (hedged in EUR) Net TR

Source (unless otherwise stated): Nordea Investment Funds S.A.. Period under consideration: 05.03.2007 – 30.11.2013.  Performance calculated NAV to NAV (net of fees and Luxembourg taxes) gross income reinvested, in the base currency of the respective sub-fund, excluding initial and exit charges as per 30.11.2013. Initial and exit charges could affect the value of the performance. The performance represented is historical; past performance is not a reliable indicator of future results and investors may not recover the full amount invested. The value of shares can greatly fluctuate as a result of the sub-fund’s investment policy and cannot be ensured. If the base currency of the respective sub-fund differs from the currency of the country where the investor resides the represented performance might vary due to currency fluctuations.

e-fundresearch.com: What motivates you in your job?

Claus Vorm: I enjoy having the possibility to use my quantitative skills on practical problems where quant can make a true difference. In addition I get motivated by the dynamic and exciting environment you have in the financial markets.

e-fundresearch.com: Which other profession would you have considered apart from becoming a fund manager?

Claus Vorm: When I was in high school I considered becoming a veterinary and when I was in the army I considered joining the Special Forces.

e-fundresearch.com: Many thanks!