NORD/LB offers new fund solution for foundations
NORD/LB Norddeutsche Landesbank now provides its expertise in the management of foundation assets also in the form a fund solution. The Nordlux Pro – StiftungsPartner A fund combines predictable, regular distributions with the goal of asset maintenance for foundations. Foundation managers benefit from a direct line to the portfolio management team and additional advisory services. Due to its long-term, global investment strategy and low fees, the fund with an asset management character is also suitable for private investors.
“We basically advocate a shareholding of up to 30 per cent. Last November, however, we used the temporary high in the indices to reduce shareholdings towards 20 per cent, as sentiment indicators suggested an overbought situation,” stated Ron Große, Head of NORD/LB’s Specialist Advisers/Private Banking.
The currency hedging of the US dollar close to the 2015 high and an overweighting of investment-grade corporate bonds also contributed to the StiftungsPartner A coming through the stock market turbulence at the start of 2016 virtually unscathed. “The way things stand at the moment, the planned distribution of 2.25 per cent for the current financial year is assured,” said Große.
Direct line and individual support
Foundations need reliable annual distributions in order to finance their charitable work. NORD/LB is very familiar with these needs because it has provided individual support in the management of foundation assets for many years. The bank has repeatedly received awards from the Fuchsbriefe foundation testers of Berlin. For StiftungsPartner A target distributions are defined, against which the fund managers are measured.
“Our customers appreciate having direct contact with the portfolio management team,” stated Ron Große. On top of this, the foundation board members can make use of additional advisory services if required. “Institutional customers with sufficient capital can also add a tailored share class with its own ISIN to the StiftungsPartner fund,” added Große.
Focus on corporate bonds, global investment universe for shares
When shaping the investment policy for foundation assets, the advisers deviate from well-trodden paths. “Our particular strengths include our international outlook,” emphasised Große. Although customers mainly come from Germany, the portfolio’s shareholding is oriented towards MSCI World, which also includes a lot of US listings. “As numerous companies with comparatively low fluctuations in business performance are based there, a global investment universe is almost ideally suited to the purpose of foundations.” Große and his colleagues have noticed that, with a global outlook, higher returns and fewer fluctuations can be expected in the long term than with portfolios that are restricted to regions.
“Strategy is more important to us than tactics.” We act in a disciplined way and do not follow every forecast,” explained Große, who deals intensively with behavioural finance and does not think much of market timing. He uses the signals of behaviour-oriented capital market research for prudent fine-tuning, but otherwise avoids a hectic to and fro. “Being able to anticipate future market developments does not necessarily mean that you will always get higher returns.” The reason given for this is that “success is instead dependent on the strategic allocation of assets.” With regard to pension investments, Große is currently worried about German government bonds: “Negative returns and the prospect of speculative gains are not an option for foundations.” Große therefore intends to maintain the overweighting of corporate bonds as these continue to have attractive risk buffers due to their yield premiums with at the same time moderate residual terms.
Nordlux Pro – StiftungsPartner A at a glance
ISIN / WKN: LU1297767904 / A14038
Fund currency: EUR
Financial year-end: 30 September
Appropriation of earnings: Distribution
Issuing premium: 0.00%
Fund manager fee: 1.00% p.a.
Management fee: 0.14% p.a.
Phone: +49 (0) 511 361-4481
With total assets of € 181 billion, NORD/LB Norddeutsche Landesbank is a leading German business bank. Its core business segments include structured financing in the energy and infrastructure sector, ship and aircraft financing, corporate customers business, commercial real estate financing, capital market business and private and commercial customers. The Bank has headquarters in Hanover, Braunschweig and Magdeburg as well as branches in Düsseldorf, Hamburg, Munich, Schwerin and Stuttgart. NORD/LB is represented outside of Germany by a Pfandbriefbank (NORD/LB Covered Bond Bank) in Luxembourg and branches in London, New York, Singapore and Shanghai.
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