DNB Scandinavia - Portfolio Manager's commentary 05/2015

Nito Simonsen - Welcome to DNB Asset Management. I am standing here with portfolio manager Karl Høgtun, leader of the stock team here in DNB.

Karl Høgtun - Hello.

N.S. - Welcome. Looking at the DNB Scandinavia: it has been a very good start to 2015 despite quite large currency movements.

K.H. - Yes. I’m quite happy being a Nordic portfolio manager. It’s a great market, has outperformed the global stock market for many decades, and it had a good start, partially helped by the strong dollar. On top of that, we have done better than the market so we have been fortunate in picking some of the right stocks. So [we are looking at] a combination of a good market and beating the market and we are happy with the start.

N.S. - I wanted to ask you. You sometimes talk about the Nordics and Scandinavia as a world in miniature. Could you please say something more about this?

K.H. - Sure. Investing in Nordic stocks is really investing in big strong global companies selling their products and services all over the globe. So you are exposed to the global economy. And they sell to all kinds of sectors so you get global diversification. Therefore it’s a true global investment.

N.S. - Could you say something more about your favourite sectors? Long term, I think, health is a sector you have been talking about quite some time.

K.H. - For sure. As you know, everybody wants to live longer and live a good life. So there is a tremendous need for helping people both in the emerging markets and the Western markets in living a better life. And in the Scandinavian region we have especially good companies in Denmark and Sweden. For example, in Denmark we have Novo Nordisk, world leader in diabetes, sometimes called the Coca-Cola of diabetes because of the scale and the power. We also have three of the six leading hearing aid companies in Denmark. Going to Sweden, you have for example AstraZeneca which is a dual listed company, but also in my benchmark, and is at the forefront when it comes to the next generation cancer treatments using your immune system to fight cancer. Also if you are so unfortunate that you need radiation for curing your cancer, there are two main companies supplying equipment – one in the US and one in Sweden, called Electra. So, many good companies to choose from.

N.S. - And I guess “many good companies” is going to be the answer to the next question as well. Why invest in a Nordic fund rather than in a global fund for people in Europe or elsewhere?

K.H. - Yes, there are two differences. While the global fund and the Nordic fund will give a global exposure, over time the Nordic markets have actually outperformed the global market. Good companies, so the quality of the companies would be one [difference]. Secondly, the sector composition - although we have broad diversification – is slightly different from the global sector composition such that you have a slightly higher beta than in a global index. Those are two of the main differences.

N.S. - Two good reasons to invest in Scandinavia and preferably in the DNB Scandinavia. Thank you, Karl, for being with us here today.

K.H. - Thank you.

N.S. - And thank you, guys, for watching.