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The year 2020 of the stock market is not over yet, but TT has taken note of the results of the Church of Sweden investments up to and including last November of this year.
During a volatile year with a stock market downturn in March and an extremely strong recovery, management’s performance now has a gain of SEK 340 million, which is equivalent to a positive return of 3.5 percent.
No mess
These are positive figures, but this time they do not exceed the benchmark used, which is 4.1 percent.
– It is absolutely no disaster and the most important thing for us is that we comply with the return requirement that the church board established for us, an average of three percent in real terms over a period of ten years. We are doing well because the stock market is doing well and we have selected good managers, says Anders Thorendal, CFO of the Church of Sweden for TT.
Historically, the Church of Sweden has been very successful with its investment strategy since the Society of Faith took over management 20 years ago.
In 2019, when global stock markets were extremely strong, the result was almost 1.6 billion SEK, the highest to date, corresponding to a 19.1 percent return. This year, however, has been a bit more overwhelming.
While the global equity portfolio has actually outperformed the benchmark, the Swedish equivalent has returned 9.8 percent compared to the benchmark’s 13.3 percent.
– As for our Swedish directors, we have had one who has been very successful while the other in turn has been less good, says Thorendal and continues:
– We have also been overweight in global equities compared to Swedish equities. It has been good while the Swedish krona has been weak, but the krona has strengthened this year and this means that even if the US equity markets have performed well in dollars it will not be as good in kroner.
TT: How did you reason during the changing spring of the stock market?
– It was extremely volatile and we received many questions from parishes and dioceses, but our advice was that we stay put on the boat. It is very difficult to get it right if you are going to get in and out of the market, but we also have a church board behind us that did not panic.
In addition to a long-term perspective when it comes to their investments, they also focus on climate and sustainability issues.
Al Gore in a corner
Managers include Generation Investment Management, led by former US Vice President and environmental activist Al Gore.
– It is positive that the United States returns to the Paris Agreement. President Donald Trump tried, through artificial respiration, to give life to industries like coal, which have no future. Now we clearly see that it is less and less economically defensible with, for example, the coal industry.
The Swedish equity portfolio contains a large stake in both Swedbank and SEB, banks that emerged during the year around revelations about money laundering in the Baltic countries.
TT: How do you think from an ethical perspective about these locations?
– It’s something that worries us, absolutely. So the question is how much history is and how much has your behavior changed and dealt with problems. We think you can see that the banks have done it.
Another problem with Swedish banks is the information that has now emerged that they lend money for, among other things, oil extraction.
– As an investor, you should also see how the loan stock is used. We believe that it is very worrying that people continue to lend money for the extraction of fossil fuels, it is not the right way to achieve climate goals.
All figures for the period January – November 2020. The result in millions of crowns.
Tobias Österberg / TT
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