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Portrait of man
SKAGEN's CEO Tim Warrington

The year 2018 saw SKAGEN assume its new position as part of the Storebrand Group, while remaining an independent fund manager. As a result, there have been changes to the SKAGEN Board and some key leaders, and we initiated a process to identify how best to serve our clients and achieve synergies as part of a wider endeavour. This process is finished. We have been able to rationalise our offering, focusing on those areas where we find credible advantage. SKAGEN’s new strategy combines value-based investing with a leading wealth management offering here in Norway, and in Denmark, and distribution of our products and those of Storebrand and Delphi funds further afield. Service to professional investors in Norway and Sweden becomes the responsibility of the Storebrand team, the leading domestic institutional asset manager in Norway.

Investing

A rough year, with perhaps the worst December for equities since the Great Depression, was the backdrop to 2018. SKAGEN Global held up well, beating its benchmark index; and SKAGEN m2 cemented its place as one of the world’s top ranked global property funds[1], beating its index for the third straight year. 

The SKAGEN investment team settled well after the first half changes. A partnership is in place to engage key personnel for the long-term, improving the stability of the investment platform and ensuring good alignment between owners, employees, and clients. We will do well when our clients do well.

The adoption of a combined sustainability policy has allowed us to combine Storebrand’s 20 years of sustainability leadership with SKAGEN’s proven record of active ownership. We continue to believe that companies that incorporate sustainability in their business strategy are the financial winners in the long term – and, as a result, the best companies to invest in. We believe in investing in the companies that can provide the best risk-adjusted returns for clients, without damaging the prospects of future generations. 

Wealth management

Also during the year, SKAGEN launched an improved offering in Norway. This is built around our position as fund experts and our new solution for the equity savings account (ASK). This entailed the launch of over 600 external equity funds for Norwegian clients as well as the ‘Recommended by SKAGEN’ concept (Anbefalt av SKAGEN). Here, domestic consumers can access SKAGEN advice and award-winning[2] institutional fund selection capability from both Storebrand and SKAGEN. The client response has been encouraging and SKAGEN is well placed as one of the leading providers of savings solutions to the Norwegian market. Further enhancements are planned during 2019 and beyond.

International distribution

As one of the few exporters of financial products in Norway, SKAGEN has increased its international coverage with the opening of a client office in Frankfurt during 2018. This allows us to better support the growing interest we receive from the German market. Combining with Storebrand has allowed us to finally press on with the establishment of a more familiar Luxembourg fund domicile for our international clients. We expect launch during the first half of 2019.

New owners – the road ahead

Founded in 1767, Storebrand has brought a uniquely long-term perspective to their role as owner. Such stability is a key factor for an investment boutique such as SKAGEN. Within the firm, we are able to maintain a singular focus on what matters: the delivery of superior returns and service to clients. Pooling resources affords access to much greater development capacity and expertise. This will ensure SKAGEN’s clients can access the forward edge of technical development and digital transformation.

In 2018, SKAGEN celebrated a quarter century of service to our clients. Fewer companies than one might think make such milestones, especially in the fund management industry. 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 underperformance. SKAGEN has seen both growth and contraction; good stories and bad. We are still here, and ready and eager to make a difference for our clients.

Outlook 2019

The year 2019, the Chinese year of the Earth Pig, promises both the potential for wealth and the likelihood of the unexpected – hardly a prediction then. Here in SKAGEN we will abide by the first and last rules of investing: buy low; sell high. It is evident that the market cycle is ageing, and that markets are frothy. While recession seems somewhat distant, perspective can quickly change. Corrections are part and parcel of the business of investing. SKAGEN’s funds provide differentiated exposure to undervalued companies with attractive upside. Our advice remains the same as always: invest for the long-term and use your excess capital to buy the dips. An exciting year beckons. I wish you and yours, health, wealth, and happiness for 2019.

This update first appeared in SKAGEN's Annual Report for 2018

References

[1] The independent fund research company Citywire ranks SKAGEN m2 number two out of 226 global property funds in the world over three years, as of 31 December 2018.

[2] The Storebrand fund selection team was named best fund selection team in Norway by Tell Media in 2018.

Historical returns are no guarantee for future returns. Future returns will depend, inter alia, on market developments, the fund manager's skill, the fund's risk profile and management fees. The return may become negative as a result of negative price developments.