All Q1-results from the 15 largest Nordic asset managers are in. That means it is time for AMWatch’s quarterly wrap-up of how the managers fared through the year’s first quarter in terms of AUM growth, flows, and overall business development.

The results from the Nordic asset managers representing EUR 1.38tn in assets under management showed an average AUM growth of 3.9% in a quarter where US and Swiss banking turmoil gave markets a bumpy ride. If the decline is measured across total assets under management, the increase is 3.1% or a total of EUR 41.6bn.

The quarterly growth rates in assets under management varied from 8.9% at Norway’s largest asset manager, Storebrand to a decline of 0.3% at Finland’s Aktia Group. 

Currency changes, especially the weakening of the Norwegian kroner, have boosted the assets under management of Norwegian managers. According to AMWatch’s calculations, the Norwegian kroner depreciated by 8.4% from the end of 2022 till the end of the first quarter. The Swedish kronor also depreciated against the euro, but only by 0.5% in the quarter. 

The depreciation of the Norwegian kroner has affected the Nordic managers with AUM’s in Norway in different ways due to their exposure to the currency. 

Also the Nordic stock market and managers exposure to these have had an effect on the differences in AUM performance in the first quarter. Swedish managers are known to have the largest equity exposure, and this was an advantage in Q1, where the Swedish equity market was the best performing amongst the Nordic markets, followed by Denmark, while equity markets in Norway and Finland retracted slightly in the first quarter of the year. 

A trend of institutional outflow

In the year’s first quarter, only a few Nordic managers have been able to attract net inflows from both institutional and retail clients, AMWatch’s Q1 interviews with the managers reveal.

Like several of its peers, the largest Nordic asset manager, Nordea AM saw outflows from the institutional segment while retail sales seemed strong. 

Despite seeing net outflows of EUR 2.1bn as well as a lower-than-average AUM growth of just 1%, Head of Nordea Asset & Wealth Management, Snorre Storset told AMWatch that this has been one of the best quarters ever in terms of flow from its private banking business.

“We saw really strong inflows from Private Banking customers, particularly in Finland and Sweden. In Finland, the quarter was actually one of the best first quarters ever in terms of inflows into our investment products in Private Banking,” he said. 

A similar story played out at SEB, where Chief Financial Officer Masih Yazdi said outflows from the institutional segment have become a trend due to insourcing. 

“It is a trend, absolutely – at least what we have seen in the last year or so. And it seems like it might be continuing for the next couple of quarters from what we hear from some customers,” he said, adding that these outflows are typically related to “very low-margin products”.

But as AMWatch analyst Flemming Højbo pointed out in his analysis of the first quarterly reports: ”A low-margin business is not necessarily always a poor business.” 

”In several other industries, a low-margin business is the name of the game and the platform you have for profitability. If you have an economy of scale, running a highly efficient business, and running a business of volume. But if speaking about volume, then outflow is a show stopper,” Højbo writes.

The exception that proves the rule of the quarter was Danske Bank Asset Management, which saw its institutional net sales up DKK 7.9bn (DKK 1.06bn) while the retail segment had net outflows of DKK 1.2bn (EUR 161m).

In terms of both AUM growth and net inflows Norway’s largest asset manager Storebrand Asset Management was the top performer in Q1. Seeing net inflows of NOK 18bn (EUR 1,580m) and an AUM growth of 8.6%, also aided by the weakened NOK. 

When asked how Storebrand AM has managed to outperform its Nordic peers, the CEO of Storebrand Asset Management, Jan Erik Saugestad said:

”I do notice that it varies amongst the different players to what extent they have inflows. Our inflow and overall strong performance are a result of the range of our solutions, our clear position on sustainable investments, and also our capabilities on alternatives.”

More fixed income, less sustainability

Most managers have reported strong demand for fixed-income funds in the first quarter as the asset class has reentered the scene. But while fixed income is back in vogue, several managers have seen lower demand for sustainable funds that accounted for a huge part of the inflow in 2022. 

“There’s definitely been less demand compared to twelve or even six months ago, and I am quite curious as to why that is. It could be a result of higher energy prices, but no matter what it seems like both retail and institutional investors are reevaluating their approach to sustainable investing,” Christian Heiberg, head of Danske Bank Asset Management told AMWatch. 

Net inflows to Nordea AM’s Article 8 and 9 products also showed a notable declining trend in Q1. ESG net flow was down by -87% compared to Q4 and by -88% compared to the first quarter of 2022.

The total net flow to the Nordic managers in AMWatch quarterly coverage amounts to EUR 2.72bn. Only Jyske Capital did not disclose net flow. 

Long way to go

The year 2022 was tough and turbulent, and across the 15 large Nordic asset managers in AMWatch’s quarterly comparison, assets under management declined by EUR 270.6bn or 16.8%.

With the beforementioned EUR 41.6bn increase in first quarter AUM, there is still a long way to go, before the losses in 2022 have been regained (see graph). 

Looking at the past four quarters, the differences in AUMs are even more pronounced than in the first quarter. In the first quarter of 2022, assets under management had already dropped, but as it would turn out, there were more to come in Q2 and Q3.