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CEO Update: A tale of fire and ice

This week a good friend sent me a video clip of an airtanker dropping its fire-retardant load on the front lawn of his homestead in the Aspen Valley, Colorado. His corner of America is beset by a bizarre combination of fire and freeze, with those areas not ablaze gripped by freezing temperatures and snow. This same week we read daily of the accelerating melt of the Thwaites 'Doomsday Glacier' in Antarctica – forecast to raise sea levels globally by anything from 65 centimetres to 3 metres.  And just this morning the World Wildlife Fund reports that wildlife populations have fallen by two-thirds in the past 50 years. Truly we are experiencing crises of both climate and extinction.

We all have a role to play in finding solutions to these crises. SKAGEN's principal contribution is one of responsible investment; both by directing capital towards those companies that might prosper by solving the challenges that the crises pose – where the investment opportunity demands it, and by persuading companies to change their ways by our engagement with them or even through the threat of divestment.

To this end, over the summer, SKAGEN has adopted an improved sustainability policy. This tightens restrictions against companies that contribute heavily to climate change while excluding businesses that lobby against the goals of the Paris Agreement on climate action. Our objective remains the delivery of best risk adjusted return, but in a way that does not leave the world a poorer place. You can read more about our engagement and sustainability initiatives in our quarterly ESG reports.

On second waves

Summer has given way to a partial return to normality for many. In a pandemic, any change in the pattern of life will cue a change in the rate of infection. August-September has seen no exception to this, and we are seeing second wave outbreaks across Europe. Many of these are occurring amongst young adults returning to high school and university. This is no time to apportion blame and demonise our youth. The key to safe passage through these waves of infection is education and example. We must know what the increasingly local guidance is, inform others of it, observe it ourselves, and guide and correct those that do not. This does not come easily to everyone; but we have a responsibility to act until such time as we have an effective vaccine at scale.

Strategy trumps tactics

Nowadays, the capital markets are gripped by a mania for large-tech. But is it correct that Apple alone should be valued above the entire market capitalisation of the FTSE 100 index of largest UK registered companies, or some eight times the wider Oslo stock market? When situations like this occur, a few people make a lot of money; many do not. Those investors lately piling into these kinds of stocks are chasing performance and investing tactically – and it is evident that several external funds on the SKAGEN platform are benefitting from this tactical, performance-chasing trend. Take care. This is high risk since we instinctively overestimate the short-term and underestimate the long-term. In SKAGEN, we believe that a strategic approach to investing over the longer term can offer the best risk-reward outcome.

Keeping in touch

Autumn is one of the most exciting times of the year for us as we leave the summer holidays behind and prepare for the final stretch of the year. To better keep our clients informed, we now offer monthly webinars where portfolio managers update us on the latest developments in their funds and answer questions from participants. The next webinar will be held on 29 September with the portfolio managers of SKAGEN Focus. You can watch our webinars here.

I look forward to seeing you online during the autumn.

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Historical returns are no guarantee for future returns. Future returns will depend, inter alia, on market developments, the fund manager’s skills, the fund’s risk profile and management fees. The return may become negative as a result of negative price developments. There is risk associated with investing in funds due to market movements, currency developments, interest rate levels, economic, sector and company-specific conditions. The funds are denominated in NOK. Returns may increase or decrease as a result of currency fluctuations. Prior to making a subscription, we encourage you to read the fund's prospectus and key investor information document which contain further details about the fund's characteristics and costs. The information can be found on www.skagenfunds.com. Storebrand Asset Management administers the SKAGEN funds which are by agreement managed by SKAGEN's portfolio managers.

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