SFR Institutional Investment Research Programme 25 years – Highlights from the study and 25th anniversary celebration
This year marks the 25th anniversary of our Institutional Investment Services Programme, and we celebrated the milestone on Thursday, November 28th, in the elegant G18 ballroom. The event brought together nearly 100 investment professionals to discuss the themes of institutional investing. We would like to thank all participants and especially our partners Impact Cubed and Forestland Investment Finland ltd. who helped us create this wonderful event.
The evening was filled with inspiring discussions and insights as we delved into the history of the Institutional Investment Survey, the 2024 study, Finland’s investment markets, and the current geopolitical landscape. In this blog post, we share highlights from the event and showcase the most intriguing findings from the survey.
SFR Research is an independent research company founded in the early 1990s, and we offer high-quality institutional investment and capital market research for the benefit of the entire wealth management and investor community. Our esteemed research is based on long-term trust and cooperation with the investors we interview. Check out all our studies here!
Images 1 and 2 - Highlights from the event
What is Institutional Investment Services Programme?
The Institutional Investment Services Programme, or ISP survey, is an in-depth interview survey conducted regularly since 2000, in which approximately one hundred of Finland's key institutional investors participate annually. The study provides a unique perspective on the Finnish institutional market and analyses, for example, investor allocations, the use of investment instruments and future trends. In addition, we investigate investors' experiences of the operations of different service providers and the reasons behind asset manager choices.
Our goal is to strengthen and streamline the market to make it easier for investors to find the most suitable partner and to enable asset managers to meet investors' needs with increasingly high-quality services. You can read more about the study here.
What Does Institutional Investing in Finland Look Like in 2024?
The year 2024 for SFR Research has been marked by significant advancements, including the implementation of a new system that enables higher-quality data analysis and the production of more refined reports for our investor and client communities. These new tools help us respond more effectively to the evolving challenges of the asset management market. Next, Iiro Nikander, responsible for survey design, and Charlotta Littow, responsible the survey's technical development, highlight key findings from this year’s research:
"In 2024, many interviewees expressed an increased need for diversification beyond Finland’s borders, while others saw the weakness in Finnish equities as an attractive opportunity to increase domestic holdings. North American equities were viewed as offering compelling opportunities, but concerns regarding the current valuations and concentration risks related to the Magnificent-7 companies were notably more pronounced than in previous years.
In fixed income, duration has been shortened compared to the previous year, and government bonds have yet to regain favor among investors. Outside of the largest respondents, there is still significant growth potential in allocations to private equity. Six out of ten private equity respondents anticipated increasing their allocations in the next 12 months. Private debt and infrastructure also remained attractive asset classes, consistent with findings from last spring’s Alternative Managers study. Additionally, renewable energy's growth potential and the integration of environmental considerations into investment strategies continued to attract broad interest among investors.
Service providers' average ratings improved further, continuing the long-term trend of increasing satisfaction with service quality. This is undoubtedly a positive development. However, areas for improvement remain, particularly regarding the taxonomy and comparability of ESG factors. Overall, trust in service providers remains at a high level. At the same time, intense competition means providers must be increasingly adept at identifying areas for development and meeting client needs. In summary, our research offers tools to tackle these challenges, with the results reflected in higher satisfaction levels.
We are deeply grateful for the warm reception that the changes we’ve made to this year’s survey have received from our readers. The greatest thanks go to all interviewees, whose participation makes it possible to conduct this research using our in-depth interview methodology. It is a pleasure to see the meticulous care with which responses are provided annually and to observe the significant role our institutional survey plays as a quality benchmark in the decision-making of service providers. The time invested in the survey truly makes a difference for end-investors, and that brings us great satisfaction.”
Who did we award in 2024?
Image 3 - Honorees at the event
Every year, we recognize the top-performing service providers in our survey. These providers are divided into three categories based on their market penetration and product range. The Large category includes the providers with the highest market penetration, while the Challenger category features providers with smaller market shares in our survey. The Specialist category highlights providers that focus on specific asset classes.
The awards are based on evaluations given by institutional investors participating in the survey. Investors rate their service providers on a scale of 1 to 5 across various criteria, and every investor's ratings carry equal weight regardless of the size of their assets or the chosen asset management model. Pension funds, non-life insurance companies, and life insurance companies do not provide ratings for their service providers due to their internal operating models. You can read more about the methodology on our website here.
We presented certificates of recognition to the top performers in the 2024 survey at our celebratory event. This year, the Large category had an exceptional outcome with a three-way tie for first place. The platinum award was shared by Danske Bank, Evli, and Mandatum Asset Management. In the Challenger category, Handelsbanken claimed the top spot, followed by United Bankers in second place and LähiTapiola in third. In the Specialist category, the award for the overall best performer went to Hamilton Lane, widely recognized by Finnish investors for its high-quality private equity solutions.
We also presented the ESG Excellence Award in each category. In the Large category, the award went to SEB, while in the Challenger category, it was awarded to Handelsbanken, and in the Specialist category, Korkia received the honor. Additionally, we recognized Nordea for its achievements in private equity investments and awarded eQ for having the highest market penetration in alternative investments. You can learn more about all the awardees here.
Finland as an Investment Destination – Challenges and Opportunities from an Investor’s Perspective
At the heart of the evening’s celebrations were two engaging panel discussions that sparked lively debates among participants. The first panel focused on Finland as an investment destination, addressing timely questions such as whether the historically large allocation to Finnish equities is still justified and why some of Finland's leading tech companies are heading abroad. Moderated by Hannu Huuskonen (SFR), the panel featured insights from Marie Karlsson (CIO/Head of Nordic, Finnish and Swedish Equities, Nordea Asset Management), Mika Heikkilä (Portfolio Manager, Proprius Partners), and Youssef Zad (Chief Economist, The Finnish Startup Community).
Images 4 and 5 – Panelists Mika Heikkilä, Marie Karlsson, and Youssef Zad, with moderator Hannu Huuskonen
The discussion highlighted the recent decline in Finnish equities, which began in the fall of 2021 and became more pronounced during the stock market rally that started in the fall of 2022, where Finnish equities significantly underperformed their Nordic counterparts. According to Marie, the Finnish stock market heavily depends on a few large companies. She pointed out that instead of the U.S. "Magnificent 7," Finland has its own "Terrible 10," with the ten largest stocks comprising over 60% of the weight in Finland's capped benchmark index. While the U.S. giants have driven strong earnings growth and valuation multiples, Finland has faced the opposite: many heavily weighted companies have underperformed in earnings, leading to lower valuations.
In addition to company-specific issues, external factors have worked against Finland. Mika noted that the economic impact of Russia on Finnish companies’ profitability was greater than anticipated. He also highlighted the lack of growth companies in Finland, with many Finnish firms focusing on high dividend payouts, which limits investments in future growth. Furthermore, Finland’s stock market is heavily export- and industrial-driven. The prolonged industrial downturn in Europe, the weak German economy, and the cooling of the Chinese market, combined with sluggish domestic economic conditions, have played a significant role in the poor earnings growth of Finnish companies.
On the topic of tech companies, Youssef emphasized the challenges of scaling Finnish companies with local capital, given Finland's status as a capital-poor country with relatively small growth and VC funds. He noted that Finnish growth companies are often too small to attract international VC investors, making it difficult for these companies to grow or list on the stock exchange. Nevertheless, the most promising growth companies, such as Supercell, Oura, and Wolt, manage to secure funding from global growth funds. Marie added that Finns need to learn to market themselves and their companies better and to take pride in their achievements. She remarked that the Finnish mindset of “Let’s underpromise and overdeliver” is not an effective growth company pitch.
The panel concluded with a discussion on the potential future returns and appeal of Finland’s stock market. Hannu Huuskonen introduced return expectation models suggesting that, at current valuation levels, Finnish equities appear attractive with long-term expected returns in the 8–10% range. Mika noted that earnings yields (earnings-to-market-cap) for large-cap funds stand at 8%, a rare and appealing figure. While he does not foresee significant growth, he argued that such valuations are attractive even without forced growth expectations. Marie agreed, suggesting that an 8% annual return is realistic and adding that there is little reason for Nordic investors to look beyond Nordic stocks. While Finland alone may not suffice, the Nordic region offers a broad sectoral spectrum and has historically provided strong return potential over the long term.
How Do Geopolitical Conflicts Shape Markets?
Andreas von der Heide (CEO & Co-Founder, Consilio International) set the stage for the evening’s second panel discussion with his speech, where he explored geopolitical perspectives and their application in enhancing decision-making.
Image 6 - Andreas von der Heide
He began his presentation by examining the distribution of wealth between the northern and southern hemispheres, highlighting its role in creating instability. At the heart of his talk were three current conflicts with significant impacts on the global order: Russia’s war of aggression on Ukraine, instability in the Middle East, and the escalating situation in Taiwan. Andreas outlined three key principles that investors should consider in their strategies: integrating geopolitical risks into investment strategies, strengthening flexibility, and diversifying portfolios. By doing so, geopolitical risks can be transformed into geopolitical opportunities.
Images 7 and 8 - Panel discussion with Stefan Löwenthal, Erkki Rusi, Gerard Moerman, and Andreas von der Heide, moderated by Kari Vatanen.
The second panel discussion of the evening, Adapting to Today’s Geopolitical Realities, focused on current geopolitical challenges and their impact from an investor’s perspective. Moderated by Kari Vatanen (Head of Allocation, Elo), the panel featured Andreas von der Heide (CEO & Co-Founder, Consilio International), Gerard Moerman (Head of Fixed Income, LDI and Investment Solutions, Aegon Asset Management), Stefan Löwenthal (Managing Director, Head of Global Multi-Asset, Macquarie Asset Management), and Erkki Rusi (Executive Director, Head of ETF Distribution, J.P. Morgan).
The panel delved into the potential global market impacts of the U.S. presidential election. Gerard noted that Trump's victory and the resulting tariffs would likely benefit U.S. equities and crypto markets, while having a negative effect on Europe. He highlighted the appeal of European fixed-income instruments in this scenario.
While geopolitical tensions and macroeconomic instability cause significant market volatility and pose challenges for investors, the discussion also emphasized the opportunities they present. Broad portfolio diversification and leveraging market inefficiencies emerged as key strategies for navigating uncertainty.
Take a look at the highlights from the evening in our video!
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