“The merit of the Ucits format is that it enables you to treat all clients equally. This is very important for us,” says Arild Orgland, managing partner and head of the investment committee of Industrifinans. “We have a model portfolio approach and try to implement changes in all portfolios simultaneously. So two clients with the same investment strategy will in principle have he same portfolio.
“Ucits simply gives you the comfort that you can buy what you want and sell what you want when you want, and that you can do it at the same price for all clients, because you have daily pricing. So you get fair allocation and best execution, which means all clients have the same portfolio under the same conditions.”
Before the advent of Ucits, this equal treatment was difficult to ensure in practice. And that is still the case if individual securities or less liquid funds are included in portfolios, according to Orgland. Consequently, mostly all of the €2bn in assets under management and advice at Industrifinans are invested in Ucits funds. This excludes some €400m which is invested in (non-Ucits) real estate through a separate entity.
Industrifinans’ clients are mainly wealthy families but also include pension funds, endowments and insurance companies. Apart from being a Ucits vehicle, a fund manager should share the same basic investment philosophy as Orgland and his team in order to be eligible.
“We are long-term investors, oriented towards quality companies that offer both earnings growth and value, so we tend to like stable growing businesses with sustainable earnings power. We try to identify portfolio managers or funds which share that approach to investing.”
The method
So how does Orgland go about in doing that? “Our fund selection process consists of three elements. We conduct a quantitative screening as a first step. We scrutinise historical performance per calendar year and performance since inception of the strategy with the same team, assess how a fund has done in both up- and downward markets, and whether the manager adds value consistently.
