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Investment philosophy

We have a simple and well-established investment philosophy for all our funds.

We are active and long-term investors looking for tomorrow’s winners, on behalf of our unit holders. Our selection of funds are managed with specialist knowledge and high ambitions.

  • We assess the sectors in a macroeconomic perspective and combine this with a thorough fundamental analysis of the companies before we invest. We invest in companies that are well positioned for long-term trends (such as the technological, demographic, and green shift), and prefer companies we can own over time.
  • We manage concentrated portfolios that are characterised by a high active share and normally a predominance in medium-sized companies. These companies are often not sufficiently analysed, so that it is easier to make misjudgements of the companies’ potential for future earnings. Today’s medium-sized companies will often be the winners of the future. This creates opportunities for us who are active managers in finding attractive candidates.
  • A conscious attitude towards risk is a key element in the investment strategy. Risk is given considerable weight both when investing in individual companies and in the portfolio composition. With a positive outlook, the portfolio’s overall risk will be sought to be set higher than with a negative outlook. We seek to avoid companies with binary outcomes. Typical examples of this can be small companies that invest everything in the development of one product.

We have for many years invested according to the same investment philosophy that has resulted in good returns for our funds. We also believe that in the future this approach will continue to create good results for our unit holders. In Fondsfinans, we have many times shown that we are patient and have the grit to sit through periods where the price development has occasionally gone against investments. In such periods, we naturally assess whether the analyses are still robust. We know from experience that it can take time before the market changes to the underlying reality. In the long-term picture, daily price fluctuations are often just noise.

 

How do we assess companies?

We use a mix of “top-down” and “bottom-up” methodologies in our investment process. This means that macroeconomics, market trends and industry selections are seen in the context of price, liquidity, and a thorough fundamental analysis. This provides the basis for our return and risk assessment.

We use in-house developed models to evaluate the future outcome a security may have. This is based on internal and external value assessments and the managers’ evaluation of risk. As such, we have a continuous disciplined follow-up of all security-positions in the respective funds as well as selected prospects in the funds’ investment universe.

It is the portfolio manager’s subjective assessment that is decisive for all investment decisions.

The Fondsfinans formula

  • We are active investors looking for undervalued companies with a long-term horizon. Our investment approach is based on both macroeconomic, and company level analysis.
  • We invest in companies that are well positioned for long-term trends (such as the technological, demographic, and green shift), and prefer companies we can own over time.
  • We monitor the development of the world economy closely and outline our outlook in our monthly reports. At present, these reports are only available in Norwegian.
  • We prefer industries with extraordinary potential for return and exclude industries that are not socially beneficial, such as tobacco.
  • We aim to maintain a flexible portfolio and ensure that investments are undertaken in companies with sufficient liquidity.
  • We avoid companies associated with high risk, particularly those with binary outcome within technology or regulation.
  • We need to be familiar with the companies we invest in. This involves meeting the management, understanding the business, value chain and its key drivers.
  • We are a looking for a fair value and always evaluate the price carefully, and naturally prefer undervalued securities.