The Swedish Foundation for Strategic Research, one of Sweden’s largest charitable foundations, is sacking the leading Swedish banks that handle the bulk of its E1bn portfolio. It says it intends to replace them with three smaller ‘boutique’ asset managers.
The new managers, who have not yet been named, will take over the management of the foundation’s entire domestic assets mandates at the beginning of September.
The foundation is Sweden’s second largest source of funding, next to the government, for university-based research has a portfolio which is currently worth SKr9.6bn (E1bn). Domestic assets account for three quarters of this portfolio, with SKr 5.5bn in fixed income and SKr 1.8bn in equities.
The foundation originally chose Sweden’s three flagship banks – Nordbanken, (now Nordea), Svenska Handelsbanken and SE Banken – to manage its domestic portfolio through their investment arms. Kammarkollegiet was added later as a fourth manager of Swedish assets.
In 2000 it terminated Svenska Handelsbanken’s mandate. Now it plans to sack the remaining Swedish banks.
Bjorn Brandt, the foundation’s director of administration, says: “basically we are dissatisfied with the way the large Swedish banks manage our assets. We are a very big customer and we feel is that we get something that is almost an index portfolio but at a much higher cost. So we are moving away from the index and looking towards absolute returns.”
He said the board had selected three specialist asset managers to replace the banks. “They will be smaller - two will be very small,” says Brandt. “And they will not be tied to the index. Instead we are giving them percentage performance targets.”
The foundation’s move follows the decision by another Swedish foundation to sack two of the largest Swedish banks as asset managers. Vardalstiftelsens, the foundation for health care sciences and allergy research, has removed two large Swedish banks as investment managers.
Åke Smids, the chairman of the finance committee, says: “Two years ago one manager slipped and we finished with him and we have now said that we are not satisfied with the remaining bank’s management. So for the time being we are running ourselves.”
Smids says the foundation was dissatisfied with the investment approach of the large banks’ asset management arms: “We think they don’t pay enough attention to the customer’s situation. They have one model portfolio and the main task of that is basically to be as close to the benchmark as possible.”
Vardalstiftelsen plans to sign up a small asset management company that is currently being set up by the former finance director of another foundation, he says. The banks will continue to handle back office work.