Aggression cost me in 2011, says top rated manager

A difficult stock-picking environment and too aggressive an approach caused Karl Høgtun to underperform in 2011, the Euro Stars A-rated manager has revealed.

The fund manager, who runs four portfolios on behalf of Norwegian asset management firm DNB, discussed the difficult year for the DNB Fund Scandinavia in a candid video blog.

The DNB Fund Scandinavia lost 24.75% over the past 12 months, while its benchmark, the MSCI Nordic Countries TR EUR, fell by 14.34%.

Høgtun, who co-manages the fund with fellow Euro Stars A-rated manager Kjell Morten Hjørnevik, said: ‘We had three good years and now we have had one bad year. There were two main reasons, one was we were being a little bit too aggressive in the fund – having a little bit too high beta.'

‘Secondly, it wasn’t the year for the type of stock-picking we like,’ added Høgtun. ‘We like to be fundamental, we like to spend a lot of time looking at valuation quality and so on. That style didn’t quite work last year. These were two of the main reasons.’

The fund's biggest exposure according to its December 2011 factsheet, is in what DNB terms as ‘sensitive sectors’, with 50% of the fund's assets distributed between communications, energy, industrials and technology.

Despite a painful year, Høgtun said he was standing by his long-standing philosophy for investing across Denmark, Finland, Sweden and Norway.

‘The Nordic market has outperformed over time compared to global and European markets. We believe the fundamentals for these companies are still in place. We have strong, internationally-focused companies often with links to the emerging markets,’ he said.

In addition, Høgtun said Nordic equities would benefit in 2012 from its safe distance from the eurozone sovereign debt crisis.

Over three year, the DNB Fund Scandinavia has returned 72.15%, while its benchmark – the MSCI Nordic Countries TR Eur – has risen 66.17%.