Stefnir hf. is an established Icelandic fund manager with assets of approximately ISK 230 billion under active management at the end of 2020. The company is wholly owned by Arion Bank and related companies and it is based at the Bank’s headquarters. The assets managed by the company are owned by a diverse group of investors, from private individuals to Iceland's largest institutional investors. Investors’ assets are invested in mutual funds, investment funds or institutional investor funds, and Stefnir has also entered agreements with a number of partnerships limited by shares on behalf of its clients. Stefnir had 19 employees at the end of 2020.

Assets under management
ISK bn.

Assets under management decreased by approximately ISK 22 billion in 2020, from approximately ISK 252 billion to ISK 230 billion. This decrease is largely explained by the dissolving of alternative investment funds, although it was positive to see growing investor interest in Icelandic shares and corporate bonds in the second half of the year. Many investors were attracted to a new fund, Stefnir – Yield Fund, which will invest in a diverse portfolio of corporate bonds and we hope that this will help stimulate further corporate bond issues on the market. Assets under management are well distributed between asset classes and the company’s revenue structure is in line with the board's objectives.

The market in 2020

It was a challenging year across all the main assets markets due to the COVID-19 pandemic. The equities markets suffered huge losses at the end of the first quarter as the pandemic quickly took hold across the globe, with international stock markets sliding more than 30%. Governments and central banks took measures on an unprecedented scale to mitigate the impact of the pandemic, coming to the aid of companies and households alike. These measures resulted in one of the sharpest corrections on record on the international equities markets, and the MSCI World Index ended the year slightly up.

In Iceland the Central Bank of Iceland responded to the COVID-19 pandemic in a number of ways, including cutting policy interest rates by 2 percentage points in several steps and announcing quantitative easing. The yield on government bonds dropped sharply when these measures were taken in the first half of the year.

Positive returns on all funds in 2020

The funds generated positive returns in all asset classes in 2020. International and domestic equities markets performed particularly strongly compared with other asset classes. International equities markets made strong gains, despite some volatility. For example, Stefnir – Scandinavian Fund gained 28% and KF Global Value, an international equities fund managed by Stefnir, was up 17% in Icelandic krónur. Stefnir bond funds also performed strongly, with Stefnir - Fixed Income Opportunities Fund returning 8% over the year. Mixed funds reaped the benefits of strongly performing equities and bonds and produced good returns for fund members.

Responsible investment and the role of Stefnir

Stefnir’s role is to manage its clients’ assets as best serves their interests. Responsible investment, diverse investment options and thorough disclosure of information are central to the corporate social responsibility to which Stefnir is committed. By paying due attention to environmental and social issues and good corporate governance we believe we can have a positive influence on our society, to the benefit of fund members and other stakeholders.

The board of directors of Stefnir adopted a policy on responsible investments and it forms an integral part of the investment process and asset allocation. The overriding aim of product development is to offer responsible investment options in response to our clients’ wishes. Stefnir’s second progress report to PRI (UN Principles for Responsible Investment) was submitted during the year and it will be possible to keep track of the company's progress and compliance with the Principles for Responsible Investment. All Stefnir employees and the board of directors are completing a course with PRI Academy which is the global leader in training on responsible investment.

In 2020 Stefnir signed a declaration of intent on investment for a sustainable recovery. Financial resources are critical for shaping the business sector and creating jobs in the period of recovery which lies ahead. Decisions taken today will have a profound impact on developments in the next few years and it is therefore important that sustainability is central to the process. By carefully planning how to invest capital it is possible to foster sustainable development, while at the same time making countries more competitive and safeguarding the future for the next generation.

The board of directors of Stefnir is committed to good corporate governance and has resolved to promote responsible behaviour and corporate culture within Stefnir for the benefit of all the company’s stakeholders. In 2012 Stefnir became the first Icelandic company to be named as a model company in good corporate governance and it has maintained this position ever since.