Asset Management in Turbulent Times

Hildur Eiriksdottir, Director, Asset Management, Íslandsbanki

Hildur Eiriksdottir, Director, Asset Management, Íslandsbanki

With the situation in the world as it is today, where we are dealing with the aftermath of a pandemic, Central Banks and Governments stepped in. Supply chains that were severely disrupted were starting to recover when the war in Ukraine started, which caused a major shock to the commodities market. All these events and actions have now resulted in very high inflation and interest rates are rising fast to fight the inflation.

Since 2009 we have seen close to a continuous rise in the equity markets but that has come to an end. Part of the recent decline in market values is based on changed investor expectations of future growth. Many companies have been priced from expectations of continuous growth but are now looking at less growth due to increased costs relating to supply chain disruptions and more challenging market situations. When faced with such turbulence following a long period of optimism, the reaction of market participants can be quite harsh.

Now more than ever it is important to be in a good relationship with clients and review what actions have been taken on the portfolio, what is affecting the portfolio, and if any changes are to be done. The risk profiling and tolerance that is evaluated at the beginning of the business relationship is important, but these turbulent times often put to test if that risk assessment must be adjusted and if any changes are to be made. That is best done through continuous communication, review, and discussion with the clients as their situation continues to change throughout the relationship.

“It is a privilege to be able to follow clients through their lives and be able to be involved during the different periods of their life, whether it be switching of housing, a change in career, additions to the family, family members growing up, and starting their own financial life”

It is a privilege to be able to follow clients through their lives and be able to be involved during the different periods of their life, whether it be switching of housing, a change in career, additions to the family, family members growing up, and starting their own financial life. I celebrate every opportunity to educate younger generations about the importance of financial planning in life and encourage them to seek education, advice, and support when planning their financial future. Through the years, asset Management has taken advantage of the development in technology and analysis that took a long time before can now be gathered in a matter of minutes. This has resulted in better service towards clients and even if there maybe only a few of us that are lucky to be in direct contact with clients, we always have a team of talented people around us from portfolio managers to settlement professionals that all have the same goal; providing good service and good returns for our clients. It has sometimes been said that Asset Management is the heart of a financial institution and I think that is due to the personal relationship that is held with the client but also to the fact that it is also in many cases the gateway for the clients to financial markets, lending, commercial banking, corporate banking, and fund management.

In recent years discussions with clients have more often evolved around sustainable investments, economic, social, and governmental or ESG issues, and impact investing. There has been a big development in the financial space in this area and now ESG is being taken into the investment process, which has both been driven by the financial institutions as well as client demands.

Data from scientists, governments, universities and more institutions are being used to evaluate the situation regarding climate change and biodiversity and how investors and businesses can play a vital role in supporting initiatives, and innovation to reduce carbon with the aim of healthy ecosystems and wellbeing of communities for generations to come.

After a long period of meetings over the internet, it was enjoyable to plan the NordicSIF 2022 conference, but NordicSIF is a Sustainable Investment Forum that was held in Reykjavik, Iceland on the 15th and 16th of June this summer. The Forum aims to raise awareness and knowledge of how sustainability must play a key part in investment decisions for this and future generations of businesses. Finance professionals from the Nordics were able to meet with academics, scientists, and other investment professionals to discuss the current situation, ongoing activities, and outlook on the twin topics of climate change and biodiversity from every aspect with a special focus on the Ocean. The speaker’s topics included scientific facts on climate change and its impact on the world stressing the importance of reliable and accurate data in evaluating the real sustainable impact companies are having.

The conference, held in Iceland opened on how the Ocean is intertwined with the history and daily life of the Icelandic nation. How necessity breeds innovation and has been doing so throughout the centuries and where the opportunities lie today. Emphasizing how Iceland has been at the forefront when it comes to green energy, sustainable fisheries, and innovation related to fisheries. It was truly inspiring to see all these professionals discussing scientific facts, ideas, and views and sharing wisdom so no one was left unmoved.

Asset management is always for the long run and sometimes we must look through the sharp moves happening from day to day for long-term results. These turbulent times stress the importance of keeping close contact with our clients and strengthening the relationship even further in the future. But talking about the future it is also important that the investments are sustainable with a positive impact on the world ensuring a bright future for the next generations because it can both bring a positive impact to the world as well as yield good returns for the future.