8 FUND IN FOCUS
Stability in turbulent times The Nordea 1 – Stable Return Fund has successfully protected investors from the elements for almost 17 years now. Asbjørn Trolle Hansen, the head of NAM’s Multi Assets Team, explains how.
Over this period, the Nordea 1 – Stable Return Fund has successfully negotiated many bouts of severe turbulence – such as the global financial crisis and European sovereign debt instability, as well as the more recent dislocations caused by the emergence of Covid-19 and subsequent variants. “First and foremost, we understand the role our strategy has as a core component of an investor portfolio. Inves- tors look to balanced strategies – such as our Nordea 1 – Stable Return Fund – for consistent returns over a cycle,2 as well as the ability to protect precious downside,” Trolle Hansen states. “Our focus on capital preservation over a three-year time hori- zon undoubtedly helps us when we encounter a pe- riod of fear and panic in markets, like we have seen on a number of occasions over the past two years.”
Risk assets enjoyed an extraordinary, and almost uninterrupted, march upwards during the pre- vious decade, underpinned by unprecedented intervention by global central banks after the global financial crisis. With muted inflation and extraordinarily low levels of volatility, the tranquil investment environment may have given rise to complacency, with little attention paid to the need for true defensive assets within a portfolio. Investors ignoring downside risk were given a rude awakening early in 2020, as the world witnessed its worst pandemic in a century. Further turbulence has followed, with years of subdued prices morphing into record-high inflationary levels, while Europe has also tragically witnessed a return to conflict this year. “The sole focus of many investors has been to maximise returns, with little consideration for mitigating risk and true portfolio diversification,” Asbjørn Trolle Hansen, the head of Nordea Asset Management’s (NAM) EUR 150bn Multi Assets Team, says. “This has now changed, and it is un- derstandable that many investors now do not know where to turn.” Consistent downside protection While stability and risk mitigation have not been the most in-demand investment qualities in recent years, they have always been at the heart of the Multi Assets Team’s philosophy. Nowhere is this better emphasised than in the team’s Nordea 1 – Stable Return Fund , which has offered investors protection from the elements for almost 17 years.1
Taking a balanced approach In the construction of the Nordea 1 – Stable Return
At a glance ` The Multi Assets Team’s ‘risk balancing’ philosophy and focus on capital preservation comes to the fore when markets are gripped by fear and panic ` Trolle Hansen argues efficient diversification is not achieved by simply allocating to numerous asset classes, but by identifying truly uncorrelated positions ` While stocks are the greatest source of risk in a portfolio, the Multi Assets Team’s allocation to Stable/Low Risk Equities display compelling ‘all weather’ characteristics
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