Sigma

Who says virtue doesn't make money?

Sweden, Norway, Finland and Denmark perennially take the top spots in the Global Sustainable Competitiveness Index (GSCI), indicating their ability to sustain wealth creation through strong governance, intellectual capital, innovation, social capital, and natural capital.   Little wonder, then, that the Nordic equity market has significantly outperformed the global market for nearly 50 years by a factor of more than 3. Or that Nordic companies have consistently outperformed European peers on value creation metrics such as return on equity over the last 20 years.

Furthermore, the economies of the Nordic countries are outward-looking, characterized by export-focused companies within mature, cyclical industries. As a consequence, Nordic equity markets have historically displayed a high correlation to both global growth and the global business cycle.

Finally, Nordic equity markets are inherently more volatile than the global equity market and are characterized by a considerable dispersion, both across sectors and individual stocks. In short, the ideal environment for a genuinely active, long/short strategy, aiming to deliver absolute returns.

Making the most of the Nordic opportunity

Crucially, we are  specialists. Our roots and focus are firmly in the Nordics: specialist expertise is the foundation of our edge.

Thematic investing is the approach we use, to screen for structural long-term value creators and value destroyers among companies in our Nordic universe. This approach allows us to see both ‘the tree’ and ‘the forest’, which is paramount in today’s markets.   Our views are often non-consensual yet we’re comfortable with the positions we hold, reassured by a robust thematic diversification. Besides, when did consensus ever offer outstanding opportunities?

Convinced, as we are, that the market is always looking for an opportunity to humiliate us as investors, our approach to risk management is inspired by some ‘healthy paranoia’ and influences our view on company specific risk and market risk.  At portfolio level, we focus on minimising drawdowns.  Risk management is then complemented by the risk group at Sector Asset Management, encompassing both investment and operational risk management.

All well and good but, ultimately, what’s in it for you?

We strive to deliver asymmetric returns in real terms, capturing two thirds of market upside in rising equity markets, while limiting downside to one third of average market drawdowns.  As such, our strategy is expected to act as an effective portfolio diversifier, when diversification is needed the most: during market drawdowns.

All this, because we have the same goal as you do: growing and preserving wealth over the years.