In a year when many investors in Nordic stock markets have struggled, Arctic Nordic Equities Fund continues to perform. Portfolio Manager Tore Mengshoel argues that the Nordics ought to be part of any portfolio. Why? Because our very own region includes some of the world’s leading companies in their fields.
Arctic Nordic Equities has been a good investment for most. Since inception nearly five years ago, the fund has an average annual performance of 21.2 percent, well ahead of its benchmark. In 2016, the fund is a whole 14 percentage points ahead of the general Nordic market. The reasons behind the result; fundamental analysis of the most attractive companies in the very north of Europe.
- We are truly index-independent, portfolio manager Tore Mengshoel explains. All the companies in our portfolio are there for a reason, and are chosen based on input from all the members of our four man strong team. The whole team is involved in the analysis of all our cases, while there is always one person in charge of each investment.
The team argues that the Nordic region has a well-diversified universe with a host of quality companies.
- The Nordic market is big enough to give us ample choice, at the same time it is small enough to get our “arms around it” and know it well. Our Nordic focus ensures that the quality of governance and general business climate is as good as, or better than, anywhere else in the world.
Apart from the Finnish company Valmet, the fund’s biggest contributors in 2016 come from Norway. Borregaard, Aker BP, and Austevoll are among the fund’s winning stocks. And the reason behind the positive performance, are not coincidental.
- In 2015, Denmark was the strongest market in the Nordics. In 2016, Norway has outperformed as the oil price has slowly recovered. As the outlook for the oil sector has improved, the “oil-heavy” Norwegian stock market has also fared better, Tore says.
That is not to say the team has invested in oil stocks only. The fact of the matter is rather the contrary - only one of the fund’s top ten Norwegian contributors in 2016 was oil related.
- Within the Nordic universe, we do not care which country or sector a company belongs to, we look for the shares we think have the best combination of quality and price. Fluctuations have been relatively modest compared to the market, even if we have relatively few stocks in the portfolio.
The team is optimistic about the time to come, as the Nordics continue to outperform the world. The Nordic region is stable, but adaptive and technologically advanced, and has given favorable stock market performance compared to Europe, the US, and the world over long time periods.
- Owning a Nordic fund the last 5, and even 10 years, has been a very good investment. The Nordics continuously score very high on a business friendly environment. In addition, many of the companies operate around the world, giving you developed as well as emerging markets exposure, Mengshoel explains. With small home markets in a global context, the region has fostered word class global companies with leading market positions.
- I recommend the Nordics as part of any portfolio. And if you decide to invest with Arctic, you get a strong team that continuously searches for high quality investments.
Read more about a fund with sound performance and with lower risk than most here
Invest in Arctic Nordic Equities in “Your Portfolio at Arctic"