Nordic investors broadening asset exposure, explains Eaton Vance’s Sebastian Vargas
Sebastian Vargas, business development director Nordics at Eaton Vance, says that investors in the region are increasingly looking beyond the asset classes that previously typified each of the four main markets.
Eaton Vance, the US manager with roots in the 1920s, has been building up its ex-US business for the past decade, including the development of a so-called multi-affiliate model.
This essentially means the business has been adding expertise via the additional brands including Parametric, Atlanta Capital and Hexavest. This has brough expertise in areas such as smart beta, and both bottom up and top down analysis based equities allocation.
The ex-US business now accounts for assets of some $13.5bn, as of the end of March 2013. Parametric, the “engineered solutions” specialist, accounts for a significant portion of this, some 41% through a structured emerging markets solution.
“We have a Uctis fund with about $1.8bn in assets. And a few separate accounts in Europe. It is an important and growing part of the business for Eaton Vance. It is still about 5% of the assets. We started from a very low base 10 years ago, and it remains an exciting part of the company to work with,” says Sebastian Vargas, business development director Nordics (pictured), who joined the company in 2005.
European distribution is based out of London, where Eaton Vance’s head of ex-US business, including Asia, is also based.
Like many involved in servicing the Nordic region, Vargas is careful to note the separate natures of each of the four main markets in the region he is responsible for. A key difference is seen between the Swedish and Danish markets.
“The Swedish market tends to be more equity orientated. It is interesting to note that the Swedish investor has been embracing non-Swedish fixed income recently. We’ve had conversations with investors and searches by those looking for high yield and loans for the first time.”
Vargas tends to focus on Tier 1 institutions, but he also has contact with sophisticated investors, those with more than $1bn or more in assets. He does not see them “replacing equity for fixed income. Instead what they are doing is broadening their fixed income investment spectrum. Instead of taking money away from equities and putting it into high yield, they are diversifying their fixed income exposure. Given the fact rates in Sweden are very low and the Swedish krona has appreciated, it perhaps makes it enticing to look for non-Swedish exposure.”