Avanza platform urges look at Alfred Berg Sverige Plus
Avanza Bank, the Swedish market fund distribution platform, has urged its users to take a closer look at the Alfred Berg Sverige Plus fund.
In an analyst note, Avanza said that a change in strategy and manager resulted in improved return, with the fund performing relatively well during the stock market fall this year, and improving in a rising market.
However, Avanza added that it wanted to see more such performance before moving to a ‘buy’ recommendation.
The fund goes back to 2000 under the then name of Alfred Berg Sverige Referens targeting institutional investors, with a minimum investment of SEK1m (€0.11m). It is structured as a specialist fund, with looser rules around the investment mandate. Such funds generally carry higher risk than ordinary equity funds, Avanza said. Despite the higher risk, the return failed to meet expectations by gaining just 30% in the past decade, well below the 70% gain in the relevant MSCI Sweden index.
Avanza said the gap is almost exclusively down to underperformance during periods when the market fell. It did not beat its index at any time between 2001-6. In 2007 it beat the index by 1%. But in 2008 it dropped -42% against the index fall of -38%.
By April 2009 a new manager was brought in. Albert Hæggström came from Alfred Berg’s Finland office. He also heads the manager’s Swedish equity team.
The fund also adopted a new value orientated strategy, before finally changing its name to Alfred Berg Sverige Plus by the summer of 2010. Although the fund again underperformed the index in 2010, this year its cautious approach has done well: over the first nine months of 2011 the Stockholm stock exchange fell -21%, but the fund fell -17%, Avansa said. When the market turned in October, adding 13% between 5-24 October the fund added almost 16%.
Avanza said that if this is the start of a new trend it will be particularly interesting for fund investors. However, not enough time has elapsed to make a proper judgment on whether this type of performance will last. However, Avanza said that the rating of 1 Star from Moningstar is “misleading”, because it is based on a performance history for which the current manager has no responsibility.
The low AUM of SEK20m is another interesting factor. Avanza said that the fact Alfred Berg manages several SEK billions in discretionary mandates means there could be an extra benefit to shareholders in future – the implication being that more of these discretionary mandates could start to feed money to the fund.