In the ever-evolving landscape of the finance industry, the days of young, hungry entrepreneurs starting small hedge funds with $100 million in capital are a thing of the past. The consensus among industry insiders is that it has become increasingly difficult to launch and sustain a smaller independent fund management company.
The necessary infrastructure has been lacking, with regulatory requirements and the rise of digitalization leading to higher costs. Tougher demands from investors and fee pressure have also contributed to addressing the bloated cost structure that has become too burdensome to bear. Additionally, the proliferation of available stock index funds has driven down the price of beta.
Enter Atle, a company with a mission to bring together niche fund management companies and capital managers under one umbrella. Similar to a fund hotel, Atle sets itself apart by also focusing on business development and sales.
“The best returns are generated by smaller independent specialized management teams. If we can find these talented managers, we can help them with the economies of scale they would otherwise miss out on due to their small size,” says Gustav Ohlsson.
Atle also aims to assist with fund marketing and distribution.
“And distribution. It’s a tight sector for smaller fund companies,” says Gustav Ohlsson, explaining that the central support functions are voluntary and offered at cost.
“Atle’s revenue comes from the distributions from the managers. It’s a good model, in my opinion. Most key individuals are shareholders, so we are on the same side of the table,” he adds.
Atle is owned by Bure to the tune of 93%. Currently, seven management teams with 30 different strategies are housed under Atle’s roof, including Alcur Fonder, Amaron, First Fondene, Fondita, Healthinvest Partners, Humle Fonder, and Tin Fonder.
The plan is to add more teams in the future.
“But the most important thing for us is to have the right managers. We are looking for the best. The managers must have active, niche strategies. Index-hugging strategies, passive funds, balanced funds, or diversified global funds do not fit our criteria,” Gustav Ohlsson emphasizes.
While there are no requirements for fund managers to invest their own money in the funds they manage, Gustav Ohlsson notes, “Most have a significant portion of their wealth in the fund or fund company. It’s usually not a good sign if one is not willing to invest in their own fund.”
Over the past five years, Atle has received 355 million SEK in dividends from its portfolio companies, with 249 million SEK redistributed to the owners, Gustav Ohlsson (7%) and Bure (93%).
Rumors suggest that Atle was involved in the bidding for Didner & Gerge when the fund manager was up for sale last year. While Gustav Ohlsson does not confirm Atle’s interest in Didner & Gerge, given Bure’s and Patrik Tigerschiöld’s history with Carnegie, it would not be surprising if they were involved. However, the deal did not materialize, and Atle settled for acquiring Didner & Gerge’s marketing chief while Carnegie acquired the funds.
Nevertheless, Atle remains committed to expanding its portfolio, pursuing new management teams, funds, and volume to grow larger. The path to achieving this synergy, whether through acquisitions or adding new teams, remains to be seen. The valuation may ultimately guide their decisions.
The price tag for a more mature fund company typically ranges from 5 to 10 times operating profit or 2% of fund capital, according to an old rule of thumb.
“We are not the highest bidders. But now we have more funds to merge with, increasing our opportunities for such transactions,” Gustav Ohlsson explains, referring to the possibility of paying more when acquiring a fund company where costs are not retained and funds are merged with existing ones.
Currently, the focus is on finding managers for the new proprietary fund company, Atle Fund Management, where former Brummer & Partners manager Gunnar Wiljander has been recruited as CEO. Gustav Ohlsson hopes to announce new names soon.
“One can acquire smaller fund companies or build teams from scratch. We’ll see how we proceed. There aren’t many fund companies to buy in the Nordics. There may be a couple of acquisitions that interest us in the next 3-5 years.”
“How big have you become then?”
“Twice as big as now. Today, we have around 50 billion SEK in managed capital.” Title: The Rise of Sustainable Investing: A New Era of Financial Responsibility
In recent years, there has been a significant shift in the world of investing towards more sustainable and socially responsible practices. This movement, known as sustainable investing, is revolutionizing the way investors think about their financial decisions and the impact they have on the world around them. From large institutional investors to individual retail investors, people are increasingly looking to align their investment portfolios with their values and beliefs.
One of the key drivers behind this shift is the growing recognition that environmental, social, and governance (ESG) factors can have a material impact on investment performance. Studies have shown that companies with strong ESG practices tend to outperform their peers over the long term, as they are better equipped to manage risks and capitalize on opportunities in a rapidly changing world. As a result, many investors are now integrating ESG criteria into their investment decision-making process in order to generate competitive financial returns while also making a positive impact on society and the environment.
Another factor driving the rise of sustainable investing is the increasing demand from consumers and stakeholders for companies to operate in a responsible and sustainable manner. In today’s interconnected world, companies are under greater scrutiny than ever before, and there is a growing expectation that they will not only deliver financial returns to their shareholders, but also contribute to the well-being of society and the planet. As a result, companies that prioritize sustainability and social responsibility are more likely to attract customers, employees, and investors who share their values, leading to a more loyal and engaged stakeholder base.
The rise of sustainable investing is also being driven by regulatory changes and industry initiatives that are pushing investors to consider the broader impact of their investment decisions. For example, in Europe, the EU has introduced regulations requiring asset managers to disclose how they integrate sustainability risks into their investment processes, while in the US, the Securities and Exchange Commission (SEC) is considering new rules that would require companies to disclose their ESG practices to investors. These developments are creating a more transparent and accountable investment landscape, where investors are increasingly held accountable for the social and environmental impact of their portfolios.
Despite the growing popularity of sustainable investing, there are still challenges and barriers that need to be overcome in order to fully realize its potential. One of the biggest challenges is the lack of standardized ESG data and metrics, which makes it difficult for investors to compare the sustainability performance of different companies and make informed investment decisions. To address this issue, industry groups, regulators, and standard-setting bodies are working to develop common frameworks and standards for measuring and reporting ESG performance, in order to provide investors with the information they need to assess the sustainability of their investments.
Another challenge facing sustainable investing is the perception that it requires sacrificing financial returns in order to achieve social and environmental impact. However, studies have shown that this is not necessarily the case, and that companies with strong ESG practices can actually outperform their peers over the long term. By integrating ESG criteria into their investment decision-making process, investors can not only generate competitive financial returns, but also contribute to a more sustainable and equitable world for future generations.
In conclusion, the rise of sustainable investing represents a fundamental shift in the way investors think about their role in the financial markets. By integrating ESG criteria into their investment decision-making process, investors can align their portfolios with their values and beliefs, while also generating competitive financial returns. As the demand for sustainable investing continues to grow, it is clear that this movement is not just a passing trend, but rather a new era of financial responsibility that is here to stay.