In the series by AMWatch on competition in the Nordics as seen from global asset managers' perspective, next up is US-based Invesco Head of Institutional Sales Nordics Stefan Behring.
How has the Nordic competitive landscape changed in recent years?
"There is a clear difference between different types of clients. In terms of the institutional client base, the focus on expanding alternative asset classes has resulted in a diverse competitive landscape in which typically small, specialized managers compete against global, well diversified managers.
The tendency is for most institutions to have a home bias as they also want to assist the local economies and business environment and from that perspective, we certainly see strong competition with some of the local managers.
The local managers often have a lower costs base, which is a strong competitive parameter, alongside strong knowledge about the local market and its actors.
To name an example, an asset manager with a core infrastructure offering and a strong track record in renewables might run into strong competition against Copenhagen Infrastructure Partners.
However, global asset managers with relevant offerings tend to complement the local managers. This is true not only in the Nordics as an asset manager with a strong platform can compete in virtually any market.
Another aspect to have changed the competitive landscape is the wholesale channel’s solid growth in strategic partnerships with distribution platforms where brand name is an important factor."
What do you consider to be the most important features for a global asset manager to become successful in the Nordics?
"Global asset manager representatives have to understand the company’s strengths and try to match those capabilities with current market demand.
As mentioned earlier, a strong brand is another essential factor. In my experience, Nordic-based institutional investors looking for a strategic partner tend to already have an idea of the relevant market actors, which means brand strength plays an important role.
A strong brand name takes many years to develop and is usually the result of a reliable platform, strategies that perform as intended in various market cycles, and products that suit market demand. Additional support functions, such as macro research, conferences, etc. are also crucial in order for a global asset manager to build a good reputation."
How is emphasis on ESG and sustainability different in your company’s home market compared to the Nordics?
"Historically, the Nordic region has been an early adopter of ESG compared to other markets, however, there are signs that the rest of the world is catching up."
Which of your investment strategies are currently most in demand in the Nordics?
"The interest in alternatives continues to persist as clients seek to improve their portfolio diversification. Generally, hedge funds have struggled and we continue to notice a sharp focus on private equity and real assets. Private credit is still a fairly small but growing allocation.
In 2019, we have seen the biggest surge in demand in global real estate, which we consider a business area in which we have a competitive edge. Additionally, we consider ourselves a leading manager in bank loans and thanks to this strength, we have been able to launch an ESG fund targeting US senior bank loans.
However, and more generally speaking, in this low interest rate environment, clients are moving further out of the risk return spectrum in their chase for yield."