This is my first update to you, our clients, as CEO. My aim in writing it is to offer you further insight on the firm and on what we are seeking to achieve – and I will continue to do so on a regular basis.
In opening, I will not pretend that recent years in SKAGEN have been plain sailing; we have faced our fair share of challenges. Nonetheless, I have made it my mission to turn the situation around.
My first half-year as CEO has seen substantial change and progress within SKAGEN. Combining with Storebrand has allowed us to rationalise our offering, focussing on those areas where we find credible advantage. We have adjusted SKAGEN’s fund offering to comprise only active equity funds; outsourcing our fixed income funds to Storebrand. Changes to the SKAGEN investment team, coupled with sensible long-term retention measures, should improve both performance and stability. Backed by long-term owners (Storebrand was founded in 1767), our new strategy combines value-based investing with a leading wealth management offering here in Norway and distribution of our products and those of Storebrand Funds and Delphi Funds to professional investors further afield. Sustainability has long been an integral part of Storebrand’s core business and by constantly improving their methodology, they aim to remain a leader in the industry. This is reflected in their product range, which has a clear sustainability edge.
Today, I find the SKAGEN investment team well-balanced and clearly aligned towards delivering superior returns. They are tough, experienced and hungry for success. We have restructured SKAGEN to deliver the new strategy, including the transfer of industry-leading development capacity to support the entire Storebrand group. We have reduced our direct cost base, mainly through synergies, greater focus and efficiencies. After all, SKAGEN is hardly alone in facing the prevailing challenges of increased regulation, industry consolidation and margin compression. Shared infrastructure will ensure we remain on the forward edge of technical development. And combining the SKAGEN and Storebrand approaches to sustainability will allow us to be better stewards of our clients’ capital, securing investment returns while preserving the ability of future generations to meet their own needs.
Clients first – always
What has not changed is SKAGEN’s fundamental sense of independence, and our desire to challenge established norms to the benefit of our clients. Our investment philosophy also remains unaltered and we will continue to offer clients the best possible levels of service and communication across our expanded range of complementary products. The soon to be launched offshore domicile will provide international investors with the familiarity and convenience of Europe’s leading fund hub, in Luxembourg. In addition, we have adjusted to the recent demands of GDPR, MiFID II and other relevant law and regulation.
External recognition of these positive changes is slow to come. We want our clients to be proud they invested with us. The fact is, both SKAGEN Avkastning and SKAGEN Tellus are now rated 5 stars (out of 5) by Morningstar. SKAGEN m2 is rated #5 of 227 global property funds over 3 years by Citywire, and rated 5 stars over 3 years, also by Morningstar. We are proud of what we have achieved; equally, we recognise where we might do better.
We have now laid the building blocks of improved investment return and service to clients. Ahead there are challenges aplenty. As an expatriate Englishman I despair at the fiasco that is Brexit. It is hard not to rail at the casual sense of entitlement that caused it. However, the British people are pragmatists and will make do with the help of old friends such as Norway. We are confident our UK clients will remain so, and that our London team will continue to be a key part of our offering to professional clients.
25 year anniversary
This year, SKAGEN celebrates a quarter century. This is no mean feat in an industry replete with failed ventures and fortunes lost. Our founders took a local money manager, from West Coast Norway, and established it as a respected European fund house. Over 25 years, clients have enjoyed both market-beating return and periods of correction; excess return and under-performance. SKAGEN has seen both growth and contraction; good stories and bad. We are the wiser for it. For 25 years, we have broadened our horizons. Today, SKAGEN has a wider perspective and offers more options than ever. We know that what we do will make a difference for our clients.
I hope you will enjoy this short film that has been made to mark SKAGEN’s 25th anniversary.