Ålandsbanken’s independent view
Anna-Stina Wiklund, portfolio manager at Ålandsbanken Asset Management, explains the manager’s independent view.
Anna-Stina Wiklund, portfolio manager at Ålandsbanken Asset Management is based in Helsinki, doing selection on behalf of Finnish clients, a number of whom are not allowed to buy direct assets, for example, because they are lawyers, and therefore have to use funds.
The selection activities make up part of the Asset Management business, and the selections made by Wiklund and colleagues are also used by the private banking business of Ålandsbanken.
Wiklund’s focus is on on three balanced funds as well as third party fund selection for discretionary mandates. The Asset Management unit also manages all of Ålandsbanken-branded Finland registered equity and fixed income funds. The €1.6bn under management through these funds represents a significant portion of the total €4bn under management across the whole bank.
Unlike some other types of organisations, relatively few of the investment ideas considered by Wiklund and her colleagues originate with clients. This stems from the discretionary approach.
Instead, the ideas will flow from sources such as conferences, media, and managers themselves. This is matched with data from sources such as Morningstar, Lipper and Bloomberg.
The filtering process starts by looking at return and volatility, across one, three and five year data, she says.
“Risk adjusted return, i.e. Sharpe ratio, is one of the most important factors in fund selection,” she says.
There are technical limits to the exposure: as an investor Ålandsbanken does not want to become the biggest in any given fund; also, the fund should have European distributor status. Meeting managers per se is not a problem, Wiklund states, with some 200 meetings annually including with managers visiting Helsinki and Stockholm – where Ålandsbanken also has a presence.
Wiklund and her colleagues have limited themselves to euro denominated fixed income, which makes sense from a Finnish perspective on currency risk.
The preferred position is in shorter duration exposure to both corporate bonds, and some high yield.
The overall investment horizon is taken on a case by case basis. For example, last year it was felt that Japan was a short term investment case. Europe is invested in on a longer horizon, although the evidence still is that economic recovery and growth is yet to be strongly felt.
Geographical weightings are decided via monthly allocation meetings. One recently resulted in a decision to lower the emerging market weighting and go overweight Europe.
“Currently we have broad exposure to European equities and small cap funds, but we are likely to add another fund offering exposure to this asset class,” Wiklund says.
“We would rather seek pan-European exposure, including some where we are underexposed, such as Southern Europe.
“Fed tapering will continue to affect emerging markets, plus sentiment will continue to affect the asset class. So, developed markets such as Europe can provide better risk adjusted return.”
Ålandsbanken does not follow a particular trading strategy. That said it does not have investments in absolute return. Instead the aim is to keep things simple in customers’ portfolios. “If an asset class such as equities is already providing 4% real upside, ie, the current dividend yield, then there is no need to go for absolute return,” she suggests.
Property is one asset class that the bank takes a particular approach to. Ålandsbanken relatively recently launched its own property fund in response to local demand, with a minimum investment of €500. But, exposure to property funds of this type is not the focus of significant allocation; knowledge of local property markets in different countries is limited.
Thus, the focus remains traditional long only funds. ETFs are used at the sector level, for specific sector exposure. Some spice can be added through, for example, a Brazil fund, but overall, the bank is perhaps seen as a more conservative organisation, Wiklund adds.