Nordea AM sets sights on Asian market
30 January 2014
News, Asia, Hong Kong, Europe
By Hui Ching-hoo
Northern European active investment specialist Nordea Asset Management (Nordea AM) is striving to expand its turf in Asia. Its newly established Asian distribution team has been tasked with providing an on-the-ground platform for its clients in the region.
Nordea AM delivers alpha investment through its multi-boutique model. With the total AUM of around €150 billion (US$202.35 billion), the company has 17 external boutiques, including fixed-income specialist MacKay Shields.
Philippe Graffart, head of fund distribution, Asia Pacific, and executive director of the Nordea Investment Fund, tells Asia Asset Management: “Mackay Shields offers our clients a wide spectrum of fixed-income products, from low duration US high-yield to investment grade corporate bonds.”
The firm installed a new distribution team operating out of Singapore in September 2013, and Mr. Graffart says they have started to approach existing clients. Likewise, Nordea AM’s Singapore office is expanding its client base locally and elsewhere, the company is looking for a local partner in Taiwan.
“The company hasn’t set a hard target for its Asian expansion in terms of AUM, even though we have seen significant asset uptake from the region,” says Mr. Graffart. “We’re positive on the Asian bond market, meaning that Nordea AM is looking to incorporate Asian high yield into its portfolio.”
Despite the CNH bond market gathering momentum over the past few years, Mr. Graffart says the company will be taking a cautious approach to that market. “From an American or European investors’ perspective, the CNH bond market still lacks breadth and depth in the absence of sophisticated fixed-income products, such as RMB high-yield,” he observes.
Rather, the company prefers to partner with local firms to tap into niche markets over the longer term. “Partnering with domestic players underscores our commitment to a particular market,” says Mr. Graffart.
Mackay Shields currently oversees around €12 billion worth of assets for Nordea AM. The firm has a long and successful record of providing quality investment strategies and play an important role to optimise Nordea AM’s investment performance.
According to Dan C Roberts, head investment officer, global fixed-income with MacKay Shields, the company seeks to achieve risk-adjusted returns by eliminating uncompensated risk. It conducts rigorous bond analysis and screens thoroughly for risk and to quantify upside potential.
Leveraging MacKay Shields’ expertise, Nordea AM recently launched the Nordea 1- Unconstrained Bond Fund, which provides investors with a flexible platform from which to invest across the global fixed-income spectrum, while mitigating downside risk and generating attractive risk-adjusted returns.
In terms of market trends, Mr. Roberts says corporate high-yield performance was stellar last year. And he fully expects this bullish run to continue through into 2014. The US speculative grade default rate for the past 12 months has reached near historical lows, and this, combined with the negative correlation between interest rates and high-yield spreads, has prompted the firm to maintain its overweight position in high-yield corporate bonds.
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