Skandia enjoying record assets under management

Of the total SK56.8bn (€6.2bn) Skandia Fonder has in assets under management, around 94 per cent are sub-advised. Just four of the total 30 funds the firm offers are managed in-house. Since selling its asset management arm to Norwegian DnB Nor Bank in 2002, the only internal asset management capability that is left to the Swedish mutual fund company is related to the fund of funds space.

“What Skandia is really good at is in selecting and evaluating asset managers,” says Jessica Malmfors, chief executive at Skandia Fonder.

The large majority of sub-advised assets are managed by DnB Nor Asset Management. This is mainly for historical reasons, as at the sale Skandia agreed the Norwegian firm would continue to manage its assets. However, all managers are monitored closely and contracts are terminated when necessary, says Ms Malmfors. DnB Nor manages a broad range of funds and asset classes, including multi-assets and alternatives.

Goldman Sachs Asset Management, the only other sub-adviser, manages around SK2.9bn across three funds, US equities, Asian equities and, since June this year, a Bric fund, which was previously managed by Allianz Global Investors.

DnB Nor has a good track record and is very strong in Swedish equity or income, and also Nordic equities, says Ms Malmfors, adding the firm also manages a global equity fund for them. “The way our funds have been managed is rather close to the index, as our mandate has been to limit volatility. The question is ‘how do we want our funds to be managed going forward?’”

Currently, Skandia Fonder is enjoying an all time high in assets under management. In August, while the Swedish market had outflows of SK8bn, Skandia Fonder had net inflows for SK6bn, which mostly went to domestic fixed income funds managed by DnB Nor. But other asset classes, such as emerging market equities, have seen significant outflows of late.

“Our challenge is to make sure that, once our customers move out of fixed income, they select our equity funds. One of my focus areas is to strengthen the sales department, and improve our communication to clients, advisers and brokers,” adds Ms Malmfors.

Sub-advisers that can help in the marketing and communication are an additional strength. “I am really fond of asset managers who are very good at talking about their funds. They are the best people to sell, if they have that talent and the confidence in talking to an audience.”

The Ucits IV regulation provides new opportunity for restructuring the fund range, especially in Sweden, where due to strict regulation, changing or merging funds has proved very difficult.

“Going forward we will have less, rather than more funds. But I can imagine launching new types of products, maybe using existing funds, taking advantage of this possibility offered by Ucits IV.”

Ms Malmfors hints at the possibility of re-launching new funds in the multi-asset, and potentially in the fixed income spaces. The alternative range, where Skandia offers only one hedge fund today, will also be developed in the future, she expects, as there is demand for absolute return.

Skandia has a strong brand as a life insurance company in Sweden, and increasingly in Denmark. It distributes mainly through Skandia Link, the unit linked platform with more than €10bn in funds, as well as through Skandia Banken. Sub-advised funds are white-labelled, as the Skandia brand provides comfort to investors, she says. Gaining access to this distribution network, where the money tends to be pretty sticky obviously draws sub-advisers’ interest.

Skandia Fonder is the sister company of Skandia Global Funds in Ireland and Skandia Investment Management in the UK. They all operate within the strategic and operational management of Skandia Investment Group (SIG), which provides manager research and monitoring. But each fund firm has its own requirements when it comes to manager selection.

For Skandia Fonder, sub-advisers must comply with Ucits IV, they must have a good track record in sub-advising assets, be strong on the operational side and in reporting. Selecting a Japan-based manager to run Japanese equities would be not a practical solution, says Ms Malmfors, but it may work for one of the sister companies.

Moreover, having captive distribution channels, it is not an issue for Skandia Fonder to distribute the same products that a manager such as GSAM distributes off-the-shelf across Europe. A more bespoke, unique product may be necessary if the distributor and the sub-adviser compete on the same platforms, says Ms Malmfors.

Jessica Malmfors, Skandia Fonder