After the huge investor education event at Bocconi University in Milan – 10,000 people in three days, I left for Stockholm at night for the Nordic Fund Selection Forum.  As I wrote in a recent blog, the Nordics have been a hidden gem for asset managers in the last five years from a net cash flow perspective, and firms such as T Rowe Price successfully made the region their gateway into Europe and Asia.

Malin & Niklas Tell - NFSF 2012 (c) Tell Media Group/Erik Björkelund

Tell Media Group’s NFSF draws a wide range of professional fund buyers as well as leading international asset managers.   Some 50 fund selectors represented individual countries and the region, including insurers, asset managers, pension funds, FOFs, wealth managers and more.

This being the fifth installment of the event, it was cause for celebration and I was honored to be invited as the keynote speaker on global trends in fund selection (drawing from AI/SI proprietary research and advisory work with some 1,200 key asset holders worldwide since 2008), as well as to co-chair the day with Niklas Tell.

Setting the theme for the day, my opening speech focused on five core themes for global fund selection (plus multi-convergence as a metatrend):

"Global Trends in Fund Selection" - Enskat; (c) Tell Media Group/Erik Björkelund

An equity centric industry, but will flows come back?

Then we went straight to the equity discussion.  After disappointing numbers for 2011, long-term cash flows for January and February 2012 combined already exceed $200 billion, with $60 billion of that total to equity products.

As outlined in Strategic Insight’s latest report, “Global Fund Review Q1 2012 – Recovering, with High Yield and Emerging Markets”, most cash flows year-to-date have gone to the US and emerging market themes.

Blockbuster product themes in our database year-to-date 2012 include equity income
(M&G Global Dividend, collecting $1 billion), Asia stocks (Templeton, Newton,
BNY Mellon), global diversified and thematic (Morgan Stanley Global Brands), and
asset allocation (Invesco Balanced Risk Allocation).

Janus’ Adam Schor (Director of Global Equity Strategies) started off the asset manager views with “high conviction, best ideas” and an overview of the Janus approach and opportunities in the global equity space.  One of his key themes was home country bias, which is an important industry theme globally.

Adam Schor, Janus - NFSF 2012 (c) Tell Media Group/Erik Björkelund

For Jupiter, Cedric de Fonclare (recipient of the Morningstar European Fund Manager 2011 Award) looked at European equities.  His focus was on the portfolio construction and global investment themes represented in his sector and country allocations, including Emerging Markets, Demographics, Globalization, Outsourcing, or Energy Efficiency.

Cedric de Fonclare, Jupiter - NFSF 2012 (c) Tell Media Group/Erik Björkelund

Asia followed, with Colin Ng (Head of Asian equities) explaining the Asia and ASEAN equity opportunities for Baring Asset Management. His focus was on current valuations versus the long-term history of the region, along with key themes such as asset allocation, key macro risks in Asia and the benefits of bottom up stock selection.

Howard Luder & Colin Ng, Barings - NFSF 2012 (c) Tell Media Group/Erik Björkelund

Concluding the morning sessions was Stewart Methven (Senior Investment Manager, Global Equities) for Aberdeen Asset Management, with an in-depth look at “income – the driving force for investment returns”.  Stewart broke down the importance of dividends in the current market environment and how to achieve dividend growth from an international portfolio of global equities.

Stewart Methven, Aberdeen - NFSF 2012 (c) Tell Media Group/Erik Björkelund

The early afternoon was dedicated to fixed-income and absolute return.  Bond fund flows have dominated the industry globally post-crisis, and managers such as Blackrock, Franklin Templeton, PIMCO and others have benefited greatly from strong cash flows.  Especially global bond and total return products have been selling well.  Moreover, absolute return themes, both for institutional and wholesale clients have returned with a vengeance.

Alternative UCITS funds in 2011 collected over $110 billion in cash flows according to Strategic Insight Global databases and alternative assets in the industry stand at 7.5%. One of the blockbusters in the space for 2011 and into 2012 was Standard Life’s Absolute Return bond fund.

Thus, Brian Fleming opened the afternoon with an overview for Standard Life Investments’ view on “multi-asset investing for greater diversification potential.” Brian holds a PhD in Mathematics and is the firm’s Head of Multi-Asset Risk and Structuring.  Multi-asset class investing has been gathering cash flow steam in 2011.  For example, Schroders best selling product last year was a Hong Kong domiciled multi-asset income product that now is being rolled out globally.

Dr. Brian Fleming, Standard Life Investments - NFSF 2012 (c) Tell Media Group/Erik Björkelund

Brian offered an overview of the current state for diversification potential and its implications for investors, especially inasmuch risk models are concerned.

Next up was Thomas Fallon, Head of Emerging Markets for La Francaise AM, with an overview of “investment grade emerging sovereign debt”, an area that has developed greatly in the last decade. Against the backdrop of seismic cultural shifts in the global economy, Thomas showed how EM sovereign debt climbed to investment grade levels.

Thomas Fallon, La Francaise AM - NFSF 2012 (c) Tell Media Group/Erik Björkelund

The next 90 minutes were among the most illuminating for both sides: Each asset manager went from one group of fund selectors to the next for 15 minutes of fund selection speed dating.  The discussion was remarkable both because of its candor as well as for how interactions, pitches and questions changed with each passing round.

Nina Krannila, Thomas Fallon - NFSF 2012 (c) Tell Media Group/Erik Björkelund

Fund Selection questions, themes and topics included:

–       Macro views of the portfolio managers

–       Portfolio details and questions around investment process and product lines

–       Questions on the team and organizational stability

–       Service elements and broad thought leadership

–       Challenges of investor education for fund selectors

–       Provision of choice

–       Partnership potential for specific investment themes and necessary ingredients

–       Changing manager and fund selection processes as asset allocation changes

Fund Selection "Speed Dating" - NFSF 2012 (c) Tell Media Group/Erik Björkelund

We then provided an introduction and a review of specific fund selection methodologies.

Parala Capital’s Steven Goldin (Founding Member) offered a fascinating overview of predictive rankings in fund selection, bridging the academic world and the necessities of forward looking parameters in the business world with a case study of Legg Mason Global Asset Management and Bill Miller.

Steven Goldin, Parala Capital - NFSF 2012 (c) Tell Media Group/Erik Björkelund

Next up was Roland Meerdter (Propinquity Advisors) with an introduction and invitation to the newly established association of professional fund investors.

The closing session was delivered by Henrik Fexeus.  Henrik is a Swedish author and television personality, and he broke down the basic elements of non-verbal communication, and how it can be improved upon in the context of fund and manager selection.

Roland Meerdter, Propinquity Advisors - NFSF 2012 (c) Tell Media Group/Erik Björkelund

As we have commented on in our research over the last few years, Scandinavia both for fund selection and SWFs has been on the forefront of many leading global processes (SRI, multi-manager, external asset managers, et al).

Henrik Fexeus - NFSF 2012 (c) Tell Media Group/Erik Björkelund

Furthermore, while Europe in the last five years had a difficult time from an aggregate cash flow perspective (and aggregate net redemptions), the Nordics have been in strong positive inflows.  The NFSF provided an in-depth look at what fund selectors are looking for today, in general and specifically for the Nordics, while also offering networking opportunities for fund selectors and asset managers.

Andreas Pfunder, Strategic Insight - NFSF 2012 (c) Tell Media Group/Erik Björkelund

I unfortunately had to leave beautiful Stockholm the next day for Beijing and Hong Kong, but Sweden reminded me to pencil in a return visit later this year.  A special thank you to the Tell Media Group team, especially Erik for his great art work.

Below are a few pictures from the event. For the full coverage of Erik’s art work, click here.

Selected Pictures NFSF 2012 (c) Tell Media Group/Erik Björkelund