Thursday, October 13, 2016 Stamford, CT USA — Nordea Investment Management outpaced all rivals in quality ratings from institutional clients at a time when Nordic institutions are seeking ways to boost portfolio returns in a challenging investment environment featuring historically low—and in cases negative—yields. Nordea is the 2016 Greenwich Quality Leader in Overall Nordic Institutional Investment Management Service.

As part of its 2016 Continental Europe–Nordic Institutional Investors Study, Greenwich Associates interviewed 144 institutions in Demark, Finland, Norway, and Sweden. Together these institutions manage approximately €400 billion in assets, about one-third of which is allocated to external asset management firms. 

Institutions were asked to name the asset managers they use and to rate the quality provided by these firms in a series of investment and service categories. Managers with quality ratings topping those of competitors by a statistically significant margin are named Greenwich Quality Leaders. 

Passive Strategies, Specialist Approaches
In addition to highlighting the strength of Nordea in overall quality, the study results show that institutional investors across the region are making significant changes to their investment portfolios.

In particular, Nordic institutions are making a major move into passive equities. Average allocations to passive equities more than doubled to 21% of total assets from 2015 to 2016. Among Swedish institutions, passive equities now account for 42% of total assets, up from just 29% in 2015.  

“Institutions’ newly increased appetite for passive strategies is not limited to equities,” says Greenwich Associates Managing Director Markus Ohlig. “We’ve seen demand for passive fixed income surge over the past 12 months, with average allocations across the Nordics increasing from low single digit percentages in 2015 to more than 10% of total assets in 2016.”  

While Nordic institutions look to lower fees by using passive strategies for core market exposures and beta, they are also making adjustments at the other end of the spectrum by shifting assets out of core strategies and into specialized products seen as having the potential to deliver higher levels of alpha. 

Nordic institutions continue to be active users of institutional mutual funds and, relative to institutions in other European countries, have achieved high levels of international diversification. They also expect their increasing use of specialized strategies to boost alpha with annual levels jumping to 92 basis points in 2016 from 66 bps in 2015.