Susanne Bolin-Gärtner joined Folksam eight years ago to professionalise the external fund selection unit, after the insurance company had sold off its own fund business a year earlier.
“Folksam already had some external funds but my job was to take that forward,” she says. “Their guided selection of funds consisted of both traditional funds as well as more exotic country or sector funds, for example a Ukraine fund.
“I wanted to take a longer-term view on our fund offering. The end clients hold pension plans and I don’t think they need the extra excitement of that sort of investment.”
Folksam’s clients typically make monthly contributions to their fund portfolios to build a pension pot. The list of funds they can choose from currently consists of 68 equity, fixed income and multi-asset funds and some index trackers (if you are interested in having a look, go to www.folksam.se).
A broad mandate
Bolin-Gärtner still has some country funds for bigger countries, such as China, India, Russia and Japan, but she has ditched most of the ‘exotic’ funds and replaced them with “broader funds with a wide mandate”.
Bolin-Gärtner prefers generic funds for several reasons. First, she does not want her clients to be faced with a difficult choice. “The end client must understand what they are buying.” Therefore, Folksam does not want to make clients choose between European and US high yield, for example, or local and hard currency emerging market debt.
“We have global high yield and corporate bond funds, and have just replaced our hard currency emerging market debt fund with the Neuberger Berman Emerging Market Debt Blend Fund,” she says.
That most clients prefer to hold on to funds for a long time is another reason she prefers funds with a broad mandate. A need for more flexibility was also behind her choice to replace the Fidelity Strategic Bond Fund with the Jupiter Dynamic Bond Fund, about 18 months ago (see chart 1).
“The Fidelity Strategic Bond Fund is a more boring fund, which did exactly what it was supposed to. But we felt market conditions were changing, increasing the need for a manager with more flexibility,” she says.
“It’s very important to have trust in the manager when picking such a fund. After all, with flexibility comes a greater amount of responsibility.” So how can fund managers assure Bolin-Gärtner that her clients’ money is in safe hands?