Nordea 1 - Global Stable Equity E EUR

Analyst Report
Morningstar's Take

by Natalia Wolfstetter
Nordea Global Stable Equities' seasoned managers and well-executed quantitative process, which combines a focus on quality with valuation discipline, make it a sensible choice for conservative equity investors. It earns People and Process ratings of Above Average.

The strategy benefits from its distinctive process, which is designed to find companies with stable earnings on top of low or moderate stock price volatility. The managers’ initial screens leave around 350 candidates for their final portfolio of 90-110 names. In the final stage, opinions of leading sell-side analysts, macroeconomic risks, ESG considerations, and risk contributions of each company are assessed before making changes to the portfolio. While the managers pay a lot of attention to valuation, they won't invest in a company purely on valuation grounds.

This approach typically leads to a more defensive portfolio than peers. At end-February 2024, the strategy had almost twice the Morningstar Category average’s weighting in defensive sectors, and it owned more companies with a wide or narrow Morningstar Economic Moat Rating. As expected, it contained losses during selloffs, including the fourth quarter of 2018 and the 2020 coronavirus correction. The strategy proved fairly resilient in 2022, supported by strong selection in the technology and healthcare sectors, though somewhat hampered by a lack of energy exposure. Given its defensive traits, it tends to lag in market rallies, as reflected in 2023, when the market’s concentration and preference for cyclical and higher-beta stocks were a headwind for performance.

The strategy features two managers who have developed its unique approach and have run it to good effect since 2005, with Nordea Invest Stabile Aktier the oldest vehicle. Robert Naess has more than 20 years of investing experience, while Claus Vorm, who had more of an academic profile, joined Nordea in 2004. We think there is a good balance in the tandem, though it is much smaller than many competitors in the global equity space. The managers benefit, however, from Nordea’s large resources in multi-asset investing, and overall we think they can adequately handle the workload that comes with this unique approach.
Morningstar Medalist Rating™Offering a muted risk profile.
To find out how Morningstar rates a fund click here.
Morningstar Pillars
PeopleAbove Average
ProcessAbove Average
Morningstar Medalist RatingMorningstar assigns the Medalist Rating to funds that are qualitatively and quantitatively assessed through manager research and algorithmic processes. The assessment turns on three key “pillars” – People, Process, and Parent – that yield an estimate of how well a fund will perform before fees but after adjusting for risk.
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