Political Risk Will Be Boon for Active Managers, Skagen CEO Says

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Rising political risk exemplified by such events as the election of Donald Trump and the U.K. vote to leave the European Union will be boon to managers that make active choices when managing their bond and stock portfolio, said the incoming chief executive officer of Norway’s Skagen Funds.

“The time has come again to think active management,” Oyvind Schanke, who’s currently one of three chief investment officers at Norway’s $850 billion sovereign wealth fund, said in a phone interview from Stavanger. “We’re getting to a crossroads here, with more and more opportunities. The more money that goes into passive management, the bigger opportunities for very active funds like Skagen.”

Schanke is no stranger to navigating global markets after spending 15 years at Norway’s wealth fund, the world’s biggest, most recently as chief investment officer for Asset Strategies. The election of Trump, who campaigned on higher barriers for international trade, and the U.K.’s Brexit vote are events that could contribute to a partial reversal of globalization, Schanke said.

That would boost expectations for higher interest rates and inflation, opening opportunities to increase returns from active management, he said.

“If protectionism is the result, it has a tendency to create inflation, at least in some countries,” Schanke said. “If that should happen in the U.S., there’s reason to believe that will spread to other parts of the world as well.”

Schanke will start as CEO of the Stavanger, Norway-based asset manager on Feb. 1. He replaces Leif Ola Rod, who took over in 2014 as the company announced it was looking for a buyer. Those efforts have now been shelved, with the manager’s ownership structure expected to remain stable, Skagen Chairman Henrik Lisaeth said during the same interview.

Schanke has been with Norway’s sovereign wealth fund since 2001 in various capacities, including as head trader, according to Skagen. He previously worked at Gjensidige and Handelsbanken.

Geir Oyvind Nygard, global head of portfolio management, will be interim CIO Asset Strategies from Dec. 1, the wealth fund said in a separate e-mail. A formal recruitment process will be initiated shortly, the fund said.