Key takeaways
- Sensor Fonder has significantly reduced the time spent on manual reporting processes, enhancing both efficiency and accuracy in their operations while also providing a high level of data quality
- The Swedish fund industry is rapidly evolving, with companies merging to reduce costs and administrative burdens while navigating increasing regulatory demands and maintaining some of the lowest fees in Europe
- Sensor Fonder sees increased opportunities with portfolio analysis with a shift towards more tools like the Temperature Score and the EU Taxonomy that can improve investment strategies and sustainability outcomes
Sensor Fonder is a boutique fund management company in Sweden with just four employees, and has been making waves since its inception in 2009. Focusing on Swedish stocks and bonds through its award-winning Sensor Sverige Select fund, the company manages approximately 5 billion SEK and has been setting the tone for agile sustainable investing with over 14 years of expertise.
Primarily owned by Primrose Partners, Sensor Fonder maintains its dedication and commitment to personalized service. Their investment philosophy and approach is clear and agile, with managers making swift and active decisions, avoiding dilution of performance by limiting the number of holdings in each fund. They have outsourced many department functions that are not fund management-related, allowing their team to strictly focus on fund management and to spend more effort to analyze companies through a sustainability lens.
The foundation of Sensor Fonder's sustainability efforts lies in their internal sustainable analysis conducted before each investment. They evaluate approximately 25 questions about each company's ability to address a specific set of exclusions, assigning internal ESG scores as well as comparing with external benchmarks i.e. Datia. These analyses are updated twice a year, ensuring they remain current and relevant.
Datia had the pleasure of interviewing Philip Karlberg, CEO of Sensor Fonder, to discuss how this small yet powerful firm tackled the challenges of sustainable investment reporting. With the help of Datia, they are now able to focus on their mission to drive sustainability in their investment decisions moving forward.
The challenge: Low data coverage and time-consuming manual reporting in a rapidly evolving landscape
Prior to Datia, Sensor Fonder faced significant challenges with time-consuming manual reporting and administrative processes, particularly related to the EET template and PAI reporting. Low data coverage further complicated their ability to develop essential information accurately, posing the risk of errors due to manual data handling.
With the regulatory landscape rapidly evolving, including the introduction of the EU Taxonomy and PAI data, Sensor Fonder's requirements shifted. For Philip, the aim was to avoid “black swans”, where sustainability-related events could severely impact stock prices, and recognized that companies with a strong focus on sustainability have regulatory and structural advantages, allowing for better market navigation over the long term.
To address these challenges, Sensor Fonder adopted a new data management approach that prioritizes data quality over specific ESG ratings. This transition enabled them to streamline their reporting processes, enhance data coverage, and make more informed investment decisions. Their challenge and ultimate goal was to reduce administrative burdens and shift with a continued focus on increased quality of data coverage, allowing for a greater focus on core investment activities. For Philip, these were the key factors that would improve Sensor Fonder’s overall performance and operational success.
The solution: Implementing a platform provider that would streamline reporting processes but stays up-to-date on latest regulatory updates
When Sensor Fonder sought to integrate sustainability into its investment strategy and streamline its processes, Datia played a pivotal role. Imagine this, previously, manual work consumed a significant amount of time; for example, filling out EET files with around 616 data points used to take a day or two. With the new EET Version 1.1.2, Datia was able to quickly adapt by updating the module, and now this task takes just 10 minutes. Also, producing PAI statements prior to Datia took a couple of days, but now, with Datia, this process is as simple as pushing a button.
“We spend a lot less time updating, for example, EET files, which is very manual, approximately 616 data points and beforehand took us around a day or two. With Datia, we can update our files in just ten minutes” - Philip Karlberg, CEO at Sensor Fonder
Why is this done so effortlessly and quickly? Datia's extensive data coverage and high transparency have been instrumental in this transformation. Sensor Fonder can now fully utilize data provided by Datia, easily accessing specific data points and understanding their sources which has saved them substantial time and resources.
Furthermore, the regular updates on the Datia platform have enhanced the agility of Sensor Fonder's reporting. According to their team, Datia's responsiveness to updates and changes has significantly boosted their reporting capabilities, enabling them to stay ahead in an evolving regulatory environment. As a result, the team at Sensor Fonder can now focus more on core investment activities, driving better performance and success.
“I think Datia is agile and willing but also quick to change if there is a figure that has been updated. I think that it’s great as it has really helped us to increase our reporting ability and taken it to new heights” - Philip Karlberg, CEO at Sensor Fonder
The integration of Datia's figures and platform into every sustainability analysis has been seamless. Sensor Fonder conducts over 100 separate analyses every six months, utilizing Datia. This has not only streamlined their processes but also significantly reduced the time spent on administrative tasks. Sensor Fonder values Datia's user-friendly platform, which handles manual and time-consuming tasks efficiently. The platform's responsiveness to client feedback and consistent updates sets it apart from others. Additionally, Sensor Fonder finds Datia to be cost-effective, enhancing its appeal as a comprehensive solution for sustainable investment management.
Moving forward: Agility to industry regulatory changes with an increased focus on high quality data such as EU Taxonomy and Temperature Score
Philip observes that the Swedish fund industry is undergoing rapid changes which means many asset managers must adapt quickly and efficiently. Many fund companies are merging to reduce costs and administrative burdens. Concurrently, there has been a surge in regulatory requirements, particularly concerning sustainability and data regulations. Complying with these new regulations demands significant time and financial resources.
“I think it's necessary for us to have a data provider that could adapt quickly to new regulations that is user-friendly and listens to the needs that we have, but also obtains high data quality” - Philip Karlberg, CEO at Sensor Fonder
Looking ahead, Sensor Fonder expects a continued trend from relying on external ratings to focusing more on classification systems within the fund industry. Since it is hard to measure Sustainable Development Goals (SDGs), especially when it comes to how companies earn their revenue, having more data will likely make classification systems more important. Over time, Philip hopes that regulations within the industry will become clearer and more consistent.
Regarding the relationship with Datia, Philip is excited about the future of their partnership with Datia. He is particularly excited about continuing working with Datia’s new features and modules, such as the Temperature Score Module and the EU Taxonomy Module. Philip has begun using the Temperature Score Module to obtain data on companies participating in the Science Based Targets initiative, a key focus area within their sustainability efforts. This module provides concrete data on portfolio evolution concerning carbon emissions, which he finds highly valuable. As more historical data becomes available, the effectiveness of these modules is expected to improve further.
Going forward, Sensor Fonder plans to leverage Datia's platform by utilising it for in-depth portfolio analysis rather than merely handling manual processes. This shift is anticipated to lead to better analyses and fewer "black swan" events, ultimately enhancing their investment strategy and and boosting their sustainability outcomes!
ABOUT SENSOR FONDER
Sensor Fonder AB is a fund company that started its operations in 2009. Today the company is owned by Primrose Partners AB, as well as the employed portfolio managers Stefan Olofsson, Ulf Öster and Stefan Ahlfeldt.
Sensor Fonder in numbers:
- Asset Under Management: approximately 5 billion SEK
- Employees: 4
- Number of funds: 3
For more information, visit Sensor Fonder’s Website.
