MFS sees institutional opportunities in Nordic region
MFS, the Boston, US, headquartered asset manager, is eyeing up institutional
opportunities in the Nordic region, explains Per Künow, managing director Nordic Institutional Sales.
MFS as a manager has distinct attributes to the way it approaches asset management, and this is guiding the development of its business in the Nordic region, explains Per Künow, its managing director Nordic Institutional Sales.
London based Künow – he says that despite the debate in the industry about whether or not to have a local office presence in the Nordic region this works well for him – says there is plenty of opportunity for MFS in the region on the basis of its existing capabilities and that making the best of these is really down to ensuring a presence via meetings, for example, with locally based fund selectors in institutions.
MFS is guided by a troika of principles: integrated research, a global platform, and active risk management.
The research platform, organised across eight sector teams, generates ideas for client portfolios. The sector team members are present across capital structures, meaning, for example, that an equities analyst does not just work with other equities analysts, but with credit analysts and others. Recommendations developed are tracked over three and five year periods to spot the alpha generated.
As part of the collaborative approach there are regular off-site meetings every six months to further ‘brainstorm’ investment ideas generation, Künow says. Another aspect that marks out MFS in this respect is that analysts are responsible for portfolio assets. This is done to encourage a mindset of portfolio management among analysts.
Local fund selectors are aware of the MFS brand, Künow says, and this offers opportunity to compete against established domestic brands.
Where additional work has to be put in is finding opportunities in what these investors are seeking over a three to five year period, rather than against shorter term projections.
One benefit Künow feels he carries with him during discussions is the ability to point to fundamental research done by MFS, and the ability to put forward funds with 10-plus year records.
Quants also factor into the discussions with investors, because it is important to recognise that while management based on fundamental analysis may do well in certain periods, in others the solutions based on quantitative analysis may do better.
Being able to discuss different approaches this way is important, because it facilitates for those investors who, say, may want a different approach to equities, but who are not necessarily looking to increase their use of passive investment strategies.
Low volatility and Smart Beta are examples of areas in which investors Künow meets are expressing more interest, although he adds that Smart Beta today arguably is something more equivalent to the deep value investing of the 1970s.
Types of investors
Künow says he has certain types of investors in mind when visiting the region. For example, in Denmark it is a case of looking for the top 10 institutional investors, but also with an awareness of how this segment of investors is changing. Danish pension funds may be seeking efficiencies via merging certain types of activities. This is resulting in aggregation of assets and a search for best in class managers.
The Danish banking sector is under pressure to continue consolidating in a way that is not necessarily happening in other Nordic markets.
Either way, it is becoming increasingly important to understand investors’ requirements before even getting to meet them: time is getting more precious, and it is therefore becoming more challenging to meet fund selectors, chief investment officers and so on. MFS needs to ensure it ticks the right boxes, but then go beyond this, for example, ensuring that from the start of an RFP (request for proposal) that all the questions are treated well and highlight MFS ‘ abilities, Künow says.
There will always be certain other factors beyond MFS’ control affecting the speed at which it can develop its business regionally, but thus far growth has continued, and Künow’s expectation is that this will remain the case as he pushes the institutional business.