SPK is one of the oldest pension structures in Sweden, and when Peter Hansson arrived there from the banking sector in 1993 he sparked a serious overhaul of the fund structure and administration.
Although a declared opponent of ‘beauty contests’, when the time could be spent implementing strategy, Hansson made an exception with the IPE awards, and explained how changes were implemented at SPK
“At the time, it was the received wisdom that fund managers looked at the operating methods of local colleagues, and behaved in a similar fashion in the local market.
“My view was that the way forward was to look at world-wide benchmarks, and how the larger funds operated in the US and the remainder of Europe. It seemed to me we should be trying to be leaders rather than simply following our peers at home,” Hansson says.
When he came back from his travels Hansson gave a number of presentations to his colleagues, before setting out again to hone the ideas, and define the pros and cons of a number of changes. “Back then we had a fairly typical Swedish system with in-house execution of domestic bonds and equities. It seemed to us that the best solution was to outsource, on the basis that our time was better spent managing others, rather than spending time on the day-to-day trading and asset placement decisions.”
At the time, in Sweden mutual funds were very retail oriented. “This led to us developing a discretionary fund methodology. By this I mean that we used a pool fund but had the same relationship with the managers as if it was a discretionary account,” says Hansson.
SPK also has its own method of managing its outsourced managers. “We carry out centralised custody and compliance monitoring, but not in a mechanical way. We try to identify key ratios and trends that we then compare with peer groups. We are able then to discuss these with the managers at regular quarterly meetings. This can often act as a warning light leading to better management and a better relationship between the managers and ourselves.”
Whilst Hansson believes there are no benefits in being “out there and exposed” in terms of revealing their internal systems, he does accept that to be at or near the top of the learning curve it is sometimes necessary to make comparisons, as he showed when he first joined SPK. “Such comparisons should be something we do to help in developing our skills as managers, and perhaps the IPE awards will encourage this.”

Topics