"The day you think you know everything, you're done for. It's necessary that we constantly renew ourselves and look for new opportunities. If I had been asked ten years back if we would be using big data analyses to asses companies, I would have said no. We're always looking for new opportunities, and it's up to us find them if we're going to deliver results. We must always adjust ourselves and be dynamic," says Danske Invest Head of Nordic Equities Lars Erik Moen.
He leads the mutual funds Danske Invest Norge and Danske Invest Norge Vekst.
Moen and his team must be doing something right, because earlier in March they took top rank in Morningstar's Fund Awards within the category of Norwegian funds.
The fund, which invests in small and medium-sized domestic businesses, has delivered an average return of 24 percent in the last five years – and an excess return of 19.5 percent against the benchmark index.
"I became genuinely pleased, it's similar to athletes being equally satisfied every time. That customers have received fine returns each time counts as an acknowledgment," Moen tells AMWatch's Norwegian sister media, FinansWatch.no.
The fund has also ranked in the top decile within its category throughout the last five years, and that's been a contributing factor to Moen taking home his fourth Morningstar award trophy since 2011.
"It's always unbelievably pleasant, and many people know about the prize. It's a category in which all Norwegian funds are compared irrespective of mandate and by using a ten-year return history," the head of Nordic equities relays.
How have you come out on top so often, and is there nothing rivals can do to challenge you?
"I've also asked myself and other players the same question. Is there actually any difference between what we do? I've heard in response that, beyond us being extremely fundamental, we also adhere rather well to our strategy and don't throw ourselves into thematic momentum trends and other waves. We bank on what we see as exciting market items, and we assess products and administration," he explains.
Wants fewest possible companies
The group's strategy for Danske Invest Norge consists solely in investing in Norwegian equities, both those listed on the Oslo exchange as well as unlisted stocks. The fund normally aims to invest in 30-50 equities for each of its two portfolios.
The main portion of Danske Invest Norge's assets under management are invested in a broad range of leading firms listed in Oslo, normally between 25 and 30 companies.
"Basically, we aim to monitor the fewest possible number of companies while at the same time wanting more firms to spread out risk. This becomes a particularly problematic situation in the growth portfolio, which is why we opted 15 years back to expand from 35 then to roughly 50 companies today," Moen says and adds that he and his team utilize the same approach and method for the two Norwegian funds.
"We analyze markets to figure out whether there are special areas that will develop in a positive way. Then we look for companies with exposure to the areas we find exciting, and then we evaluate how administration has performed within their particular segment, Moen says and continues:
"More frequently, we see if any strategic changes were made underway and whether these were also made at the right time – and whether success is already priced into the stock. Then we assess exciting segments, companies, products and see if everything matches. If too much future success is already priced in, then we avoid it."
Uses active ownership to impact
Danske Invest's funds also support the use of various ESG screening criteria through systematically identifying and handling sustainability factors in the management process and through active ownership.
"We as investors are becoming more or less obliged to invest in sustainable companies. If we don't emphasize sustainability, then our customer base will become limited. The challenge here is that some sustainable companies already have success priced into equity valuations, the manager says and continues:
"The point being that we as an active manager appreciate being able to select favorably priced companies and to avoid firms we see as having excessive valuations."
English Edit: Daniel Frank Christensen
(This article was provided by our Norwegian sister media, FinansWatch.no)
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