The presence of this Statens Pensjonsfond Utland, as it is officially called, in a country of only five million people is “interesting and fruitful,” says Orgland. “I monitor and follow their investment policy and investment decisions closely.” He sees that many Norwegian institutional investors are adapting to the sustainability benchmarks set by the sovereign wealth fund. “They position themselves closely to the ESG-policy of the fund.”
Skills highly prized
Within fixed income, Orgland has started to introduce more unconstrained strategies, saying: “We want more skills-based managers who can deviate from beta returns.” Just like in equities, he also prefers the global approach here. The two unconstrained fixed income funds he uses are the Legg Mason Macro Opportunity Bond and the BNY Mellon Global Opportunistic Bond funds.
“The Legg Mason fund typically has skills-based management, whereby the manager has a high degree of flexibility in implementing specific skills. It can go short in duration, for example.” When it comes to recommending these unconstrained bond funds, Orgland makes a strict split between professional and non-professional investors. “These funds are relatively complex and I believe clients should always be able to understand the fund they are investing in.”
He thinks that while Nordic private investors are more comfortable with risk than most of their European peers, this risk appetite mainly applies to equities. “Our non-professional clients understand the risk-reward profile of equities, but complex fixed income products are harder to explain. Most investors believe fixed income is a low-risk investment, so we should invest for them accordingly.
Wait and see
Many of his peers across Europehave embraced alternative Ucitsfunds. Orgland is testing the water, having included a number of market neutral, long-short equity and multistrategy funds on his white list, but has stopped short of investing in them for now. “Funds like Standard Life GARS are typically skills-based and uncorrelated to equities and bonds. That’s exactly what we are looking for.”
However, he retains some importantreservations with regards to the asset class. These types of funds are certainly no less complex than unconstrained bond funds, making them not so ideal for non-professionalclients, according to Orgland’s philosophy. “Performance of alternative Ucits funds overall has not been very strong either, which means it’s quite hard to find the skills worth paying for. So I keep on looking.”
