Bankinvest tops growth ranking for 2016

The total value of assets in the mutual fund Bankinvest grew by DKK 13.3 billion, or just shy of 13 percent, last year. That was a record among Danish investment associations, which increased their total asset value by 6.5 percent in 2016.

The collective asset value in Danish mutual funds grew by DKK 121.2 billion, or 6.5 percent, to a total of DKK 1,974.1 billion in 2016, according to data from the Danish Investment Fund Association (IFB).

The lion’s share of the increase is, however, due to accumulated returns in stock-taxed departments and reinvestment of dividends in dividend-paying investment departments. Investors’ net purchases adjusted for dividends came to DKK 21.1 billion in 2016, which was 19 percent lower than in 2015, two percent lower than in 2014, and seven percent lower than in 2013.

According to FWAM’s calculations based on numbers from IFB, the major winner among the mutual funds in 2016 was Bankinvest, which raised its asset value by DKK 13.3 billion, or 12.8 percent, to DKK 117.2 billion last year.

It is closely followed by Nordea Invest which grew its assets by DKK 13.2 billion. But given Nordea Invest’s larger size, it only translates into eight percent growth.

Predictability paid off

Bankinvest was formed by a group of local and regional banks back in 1969 and is still owned by 38 small and mid-sized banks, which also account for the bulk of the distribution for the associations departments.

According to Bankinvest’s CEO, Lars Bo Bertram, the predictability of Bankinvest’s return is what paid off for investors.

"We have predictable products that our distributors believe represent a sensible balance between risk and return, and then we spend a lot of time talking to our distributors about investments," Lars Bo Bertram says in an interview with FWAM and adds:

"We have 115 employees who only deal with investments, so we believe we have some skills that are useful in relation to our distributors."

Increases use of external managers

In recent years, Bankinvest has opted to outsource management of a growing number of its investments, and investments worth a total of DKK 11 billion on European and American small cap stocks and high-yield bonds have now been placed with the asset managers Oddo Meriten, Fidelity, and State Street.

"We only focus on what we are good at and outsource what we are not good at. For example, it's not credible for us to claim that we are capable of selecting US small cap stocks, so that’s one of the areas where we have outsourced," Lars Bo Bertram explains.

According to FWAM’s calculations based on IFB numbers, Bankinvest’s retail business grew by DKK 6.1 billion, or 9.2 percent, to DKK 72.5 billion in 2016, while its institutional business grew by DKK 7.1 billion, or 19.2 percent, to DKK 44.7 billion.

Lars Bo Bertram says it is particularly Danish stocks, European small cap stocks, and corporate bonds, including high-yield bonds, which have grabbed the interest of investors in 2016.

Danske Invest has lost steam

According to IFB, the overall retail market for Danish mutual funds has grown by more than 72 percent to DKK 345 billion during the past five years. Danske Invest is still by far the largest player with a total asset value of DKK 440 billion, of which retail clients have contributed DKK 230 billion.

But the numbers also show that Danske Invest has lost a bit of steam. Last year it lost institutional assets worth DKK 18.2 billion net, while it added DKK 9 billion in the retail segment. So the total value has shrunk. And viewed over a five-year period, Danske Invest is outperformed by the overall market.

When it comes to growth as a percentage, the major winner in 2016 was MS Invest which grew its assets by 51 percent to DKK 453 million. The biggest loser was Norway’s Skagen Fondene, which has seen an investor exodus in recent years due to disappointing returns and internal unrest. Last year, it lost more than half of the value of its assets in Denmark and it now only commands assets worth DKK 2 billion in the country compared with DKK 7.5 billion at the close of 2013.

Technically, the biggest mutual fund according to IFB’s numbers is Nykredit Portefølje Administration. However, that is not an independent mutual fund, but a company that administers a range of institutional and retail-focused investment associations.

Huge success for Fundamental Invest

Viewed over a five-year period, the undisputed champion among the mutual funds in terms of growth in asset value is Michael Voss’ Fundamental Invest, which grew by a staggering 7,905 percent from just DKK 22 million at the close of 2011 to DKK 1.7 billion at the close of 2016.

Technically, the mutual fund Formuepleje tops IFB’s growth ranking, but that is primarily down to a tax-related redistribution of funds.

In a five-year scope, a number of other mutual funds have also performed nicely, albeit often from a relatively low starting point. Aalborg-based Stonehenge has nearly quintupled its value from DKK 210 million to just over DKK 1 billion at the close of 2016, while Strategi Invest has nearly quadrupled from DKK 106 million to DKK 410 million.

Among funds managing assets worth minimum DKK 500 million in 2011, the top grower is BLS Invest which has tripled its value to DKK 2 billion, while Maj Invest has grown by 247 percent to DKK 13.5 billion and the value of Handelsinvest’s assets has grown by 146 percent to DKK 10.9 billion.

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