How we at Danske Invest steer our funds through the Corona crisis
At Danske Invest, we have taken a number of initiatives to ensure that our clients’ investments come through the crisis as securely as possible.
Recently, we have seen historically high levels of volatility in financial markets around the world. We at Danske Invest are monitoring developments closely, while a number of necessary initiatives have been enacted to ensure stability in our operations and the management of our funds.
Funds suspended when NAV cannot be accurately calculated
In the course of the past few weeks, Danske Invest, like many other mutual fund companies, has been forced to suspend funds during periods when NAV cannot be calculated accurately. This has been necessary because it is vital that the price of our clients’ investments – also called the net asset value (NAV) – is calculated correctly.
Suspension is a tool that is used to protect investors from trading at prices that are not accurate. Suspending trading in a fund means in practice that no-one can either buy or sell the fund. How long a suspension lasts varies from shorter to longer periods, but rarely over several days – though this can happen in extraordinary circumstances.
“An important task we have is being able to calculate the right NAV for all our funds. However, certain events can arise that force us to enact a suspension. This might be due to entire markets closing or the introduction of a halt to trading – or now, when liquidity in the underlying securities is poor and prices are so volatile that we simply cannot calculate accurate prices. The purpose of a suspension is to protect existing and potential investors,” says investment specialist Kim Thelle Pilgaard from Danske Invest.
Increased swing factors for certain funds The turmoil of recent weeks has not only affected prices in equity funds but also prices in a number of funds with corporate bonds and bonds from high-yield countries. Due to the volatility of the financial markets, Danske Invest has been forced to make a temporary adjustment to swing prices. [Link: News about sing on LU web site. Publications, investor notices and other documents.
The reason is that the spread (difference) between the buying and selling prices on the underlying securities has widened markedly and resulted in higher transaction costs in the funds. The aim with the increase in subscription and redemption fees is that only those investors who buy or sell funds will be affected by these charges.
We are monitoring the market and adjusting to developments
The Corona crisis has created uncertainty for more or less all types of investments in the financial markets and thus also for Danske Invest’s funds – both actively managed and passively managed. Our portfolio managers are working intensively and making use of all available tools to steer the funds through the crisis in the best possible way.
“In recent weeks we have initiated a great number of measures to ensure Danske Invest’s operations continue and that all our funds are managed optimally throughout the crisis. Last week we made sure that everyone who could work from home did so to avoid spreading the virus. Furthermore, we have divided our employees into two teams so that all critical functions needed to run a mutual fund company are covered should a quarantine situation arise. It is vital that we can react quickly to developments at any time,” says Kim Thelle Pilgaard.
These contents have been prepared for information purposes only and do not constitute investment advice. Note that historical return and forecasts on future developments are not an indication of future return, which can be negative. Always consult with professional advisors on legal, tax, financial and other matters that may be relevant to determining the suitability and appropriateness of an investment.
