Let the Alpha free, urges SEB’s Mattias Hagen
Mattias Hagen (pictured), head of fund selection at SEB Wealth Management talks about why he believes managers should have the ability to chase alpha without getting bogged down in risk control processes.
SEB was established in the mid-19th century. Today it is one of the biggest providers of collective investments in its home market Sweden, and through its wealth management business offers access to internal and external managers.
What is the AUM in funds SEB Wealth Management has for its client base?
SEB Manager Research is responsible for advising €10bn and SEB Wealth Management has €120bn in total AUM, including money internally managed by our Investment Management organisation. Manager Research is responsible for servicing institutional, private banking and retail clients with fund recommendations.
We are supported by a portfolio solution and partnership management entity in order for us to offer the full value chain of a multi-management solution for our clients.
This has enabled us, in the last couple of years, to reach out to clients ranging from the most sophisticated Tier 1 clients to private clients in the Nordic market.
We are also selling our research: consulting to large institutions and fund-of-funds platforms, for example.
Is it all in actively managed funds?
Manager Research is focused on finding actively managed alpha generators, but SEB Wealth Management offers access to both actively and passively managed funds.
What sources do you use to find new funds?
Manager Research utilises several quantitative and qualitative sources. Quant data is, among others, found in Lipper Hindsight and Morningstar Direct.
We also have our proprietary information system. However, many of our best investment ideas have been generated from our long-term experience and network as, for example, databases rarely catch managers moving around.
Do you run an ‘approved list’?
We have a list of around 90 recommendations, which is completely dynamic.
We have another 50 or so we actively follow that do not carry a positive rating.
We are always overseeing our recommended list regardless of asset class, but at the moment we are working on a global-cash-plus mandate, different US SMID strategies, Asia Pacific equities and Nordic hedge fund strategies.
What strategies do your clients favour?
Generally, fixed income and emerging market equities.
Could you explain briefly your selection process?
We spend most of our time analysing managers qualitatively, as we are trying to cover all angles of the investment process and the environment it exists in.
Our research process involves one-on-one meetings with portfolio managers, analysts, and key persons at the firm, such as the chief executive, chief investment officer and head of research.
They are crucial for building the overall picture of the investment process. This is supported by holdings-based and return-based quant data.
We spend a lot of time analysing the dynamics of the investment organisation, its philosophy and process.
Investment management is a people business and has to be treated that way. I believe many tend to forget that, especially in light of the last couple of years.