Norway’s ‘middle’ sets up Trønder fund to outperform big-cap slump

The slump in fortunes affecting Norway’s oil and gas sector because of the global collapse in the oil price has set the scene for funds focused on domestic small and mid-cap companies across other sectors to outperform the broader market – and nowhere more so than at Forte Trønder, the fund offered by local asset manager Forte Fondsforvaltning based in Norway’s ancient capital city Trondhiem.

The Trønder fund leads all funds listed in Morningstar Norway’s Norway Equity sector so far this year, with a return year-to-date of some 12.6% in NOK terms, well ahead of the second-placed fund, which is another from the Forte stable; the Forte Norge has returned 7.1% from its broader portfolio that considers all stocks listed in Oslo, rather than just companies with a strong regional connection to ‘middle’ Norway.

The Trønder fund’s mandate is to look at companies that have either their head office, manufacturing, value creation, capital base, or historical connections to the region. With a portfolio focused on some 16-20 holdings of local companies and a significant weight to micro-, small- and mid-cap listings, it is described as a high risk fund, but so far it is providing an opportunity to significantly outperform its benchmark OSE FXLT Mutual Fund Index Linked/TOTX index.

Launched in 2013, the NOK70m fund has returned over 16% annualised over three years, according to Morningstar Norway data, and has garnered a five-star rating from the funds data provider.

Manager Jomar Kilnes (who also manages the Norge fund) has a 16-year background as an analyst and manager, including working at Green Cay Asset Management, a US registered hedge fund based in the Bahamas, as well as work at Norsk Hydro and Esso Norge.

Key portfolio holdings include Det Norske Oljeselskap (9.51%), SalMar (9.39%), SpareBank 1 (7.67%), Nordic Semiconductor (6.77%) and Next Biometrics Group (5.76%).

In euro terms, it has turned €10 three years ago into about €13 of value today.

In the past 12 months, the value increase went from an equivalent €10 to more than €11, however, the benchmark index over the same period destroyed value, with the benchmark offering some €8.50 against the original €10 investment – according to Morningstar Norway figures.

That outperformance has raised the profile of the fund among Norwegian media, but also raised questions of the degree to which Norwegian equity funds should specialise in a market that is heavily dominated by market capitalisation of giant oil and gas companies along with shipping and seafood related businesses.

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