The stars are based on an assessment of risk-adjusted returns, where five stars are awarded to the top 10 per cent of funds in their category. Four stars means that the fund is among the next 22.5 per cent of funds.
“We are convinced that our bottom-up strategy, with a focus on finding companies with high value creation at a reasonable price, has been the key to this,” says senior portfolio manager Andreas Sørbye.
“We are convinced that this strategy is also the key to future success.”
Together with Andreas Kamvissis, he manages Pareto Global, which recently passed NOK 5 billion under management. “It has been an eventful and educational journey,” says Sørbye.
In recent years, the world has been characterised by unexpected and sudden events; 2023 has not been much of a disappointment either.
“At the beginning of January, few people were able to predict the sharp rise in the stock market that we have witnessed in 2023,” says Sørbye.
At the start of the year, the mood was completely different than now. 2022 was a weak year for the markets, characterised by higher interest rates and geopolitical concerns.
“It's easy to forget today, but at the beginning of 2023, it was pretty much agreed by all the experts that the US would enter a recession within a few months,” says Kamvissis.
The last few years illustrate well why the managers at Pareto Global try to see through market noise, macro forecasts, and interest rate predictions. Instead, they spend all their time finding undervalued, robust, and profitable companies. The companies must be large, well-established, and listed on developed markets.
“We follow these companies over time and try to get to know them as well as possible. Market movements create opportunities for us to become long-term owners in the companies,” says Sørbye.
Over the years, the managers have learnt where to look for these companies.
“We avoid sectors with binary outcomes and weak competitive advantages – there are actually a surprising number of them,” says Kamvissis. “In addition, we try to create a portfolio that can complement a Norwegian portfolio over time. For example, our portfolio contains no investments in Norway or in oil companies.”
The fact that the fund has now been awarded five stars for the turbulent markets of the past three years shows that the strategy has worked.
“We are convinced that this strategy is also the key to future success. Our companies are strongly positioned in attractive segments, and they have strong balance sheets with little debt. Regardless of whether interest rates go up or down, whether the oil price is 50 or 100 dollars, whether there is a recession or not, these companies will continue to strengthen their positions and create value for shareholders. And it is this value creation that we as long-term investors want to participate in, for the benefit of our unitholders.
