Fostering fund of funds at Robur
Mårten Agneskog and Malin Hallén of Swedbank Robur outline the benefits of a fixed cost fund of funds approach.
Swedbank is one of the big four banks active in the Swedish market, and its asset management business Robur claims to be the biggest local manager through its market share, especially at the retail end of the market.
Mårten Agneskog (pictured centre) and Malin Hallén (right) – along with Marcus Andersson (left) – are portfolio managers involved in the company’s fund of funds (FoFs) offering, which a decade after its launch today comprises of about 13 products targeting Swedbank’s Nordic and Baltic customers.
The FoFs were originally developed for retail customers who did not want to get involved in selection processes themselves. Over time, this has developed to include a larger product range, including portfolios for Swedbank’s private banking business.
Advantages for customers include the packaged nature of the products and the more dynamic allocation they facilitate compared to, say, a single global fund, says Agneskog. “If you look at Morningstar’s data for global funds sold in Sweden, you notice the FoFs’ performance. This is the result of the allocation process,” he adds.
The cost of fund of funds
FoFs raise questions of cost, but Robur has taken a deliberate approach, he adds. “We’ve put a fixed cost on it. Then we absorb other underlying costs. The cost for our global equity FoF is 1.6% for the customer compared to, perhaps, 1.4% to 1.5% for a single global fund for a retail customer. It is not 1.6% plus the underlying fund fee, and that’s often missed in the debate.Customers do get value for money.”
Robur’s FoFs business is part of Swedbank’s Structured Services group which, according to Agneskog, involves people working in areas such as quants, strategies and selection with a process for achieving overarching strategic allocation between asset classes and geographies.
“In total, there are about 23 people,” he says. “That’s how we get to the allocation. In the area of manager selection, we also use a number of external managers, and there is a separate process for selecting these, which is what we mostly work on.”
The FoFs are focused on active managers, although futures ETFs can also be used.