Markets

Asset management

Asset Management along with Arion Bank’s subsidiaries play leading roles in the Icelandic asset management market with assets under management at ISK 1,013 billion.

Diverse services to meet different needs

Asset Management specializes in providing the full spectrum of investment opportunities and services to diverse clients, aided by our employees’ decades of experience and expertise in the financial markets. The key task is to offer personal services, laying the foundation for strong, long-term and financially rewarding relationships with our clients.

Sustainability and responsible investments

Arion Asset Management plays an important role in society by protecting and investing assets for private clients, institutions and companies. Asset Management builds its business on trust and responsibility towards its clients, stakeholders and society as a whole.

As a leading player on the domestic financial market, Asset Management takes its responsibilities seriously and is committed to continuing building its knowledge of sustainability and responsible investments. We regularly share this expertise to provide guidance and instruction both within the Bank and in the services provided to our clients.

In 2018, Institutional Asset Management introduced rules of procedure on responsible investments which incorporate the three basic criteria of sustainability: environmental, social and governance. These criteria are used along with financial criteria to evaluate investments and inform all investment decisions.

Institutional Asset Management carried out an analysis of non-financial information relating to companies listed on the main market of Nasdaq Iceland in 2018 and again in 2019. The quality of non-financial information on the companies in the analysis improved significantly between those years. This analysis is a key component of Asset Management’s commitment to responsible investments and measures the performance of listed companies and the market as a whole in terms of sustainability. Our specialists have held meetings with representatives of these listed companies to discuss the results of the analysis in order to see what improvements could be made and that the companies are given the opportunity to take action before a final analysis is published. This has created a valuable opportunity for the listed companies and Asset Management to discuss non-financial reporting and progress on sustainability, which has proved vital for providing incentive for companies on their journey towards sustainability and enhanced disclosure to investors.

Arion Bank is an active participant in shaping and developing responsible investment in Iceland and has representatives in working groups for IcelandSIF, Iceland Sustainable Investment Forum. Arion Bank was one of the founding members of the organization in 2017. The Bank is also a signatory to the United Nations Principles for Responsible Investment (PRI), an international organization of asset management companies and asset owners. By becoming a signatory to PRI, Asset Management abides by the PRI’s six key criteria on responsible investment and prepares and submits a transparency reports to the organization.

The actions taken by Arion Bank’s Asset Management division on responsible investment are closely aligned with the Bank’s sustainability policy and the UN Sustainable Development Goals number 5 on gender equality, number 8 on decent work and economic growth, number 9 on industry, innovation and infrastructure, and number 13 on climate action.

Good year for pension funds

Asset Management specializes in managing assets of institutional investors and providing comprehensive pension fund administration services. Frjálsi Pension Fund, Iceland’s largest independent pension fund, has enjoyed a prosperous partnership with Arion Bank and its predecessors for many years. Arion Bank’s supplementary pension scheme, Lífeyrisauki, is also managed and administered by Asset Management. Lífeyrisauki is the largest defined contribution fund in Iceland which exclusively receives supplementary pension contributions. In 2019 its assets under management exceeded ISK 100 billion. Lífeyrisauki has around 80,000 fund members, a quarter of whom save regularly for retirement or use their savings to repay their mortgage. Lífeyrisauki offers a wide range of investment strategies. In 2019 all of these investment strategies yielded positive real returns. In terms of return, the best performer among the investment strategies was Lífeyrisauki 1, while the nominal return on all the different strategies ranged from 4.3% to 20.4%, depending on their risk profile. 

Frjálsi Pension Fund, which is managed by Arion Bank, has performed strongly in recent years and has won 12 international awards from the respected publication Investment & Pensions Europe (IPE), the most by any Icelandic pension fund.

The fund is now more than 40 years old and was established in 1978, forming the basis for the first private pension fund in Iceland for all employees free to choose which pension fund they wished to belong to. The fund therefore provided a counterbalance to the mandatory labor market coinsurance funds which had been founded several years previously. Over the decades, the fund has been administered by six financial institutions, the last 11 years under the successful management of Arion Bank. News and other information on Frjálsi Pension Fund can be seen on the fund's website or Facebook page.

Private Banking

Private Banking offers high net worth individuals and corporate clients personalized financial services. Each client has their own account manager who manages and invests the asset portfolio. Account managers closely monitor activity on the financial markets and make changes in accordance with an investment strategy designed to meet the client’s financial needs.

Private banking clients are in close contact with their account managers through various channels. Each client receives detailed account statements monthly. Clients of Private Banking receive the Bank’s premium terms at any given time.

The digital solutions aimed at Private Banking and clients seeking general investment services have proven popular. For example, retail and corporate clients can now open custody accounts simply and securely by signing agreements and other documents through electronically channels.