Stefnir hf. is a well-established Icelandic fund manager with assets of approximately ISK 252 billion under active management at the end of 2019. 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 individuals to Iceland's largest institutional investors. The fund members' assets are invested in mutual funds, investment funds or institutional investor funds, and Stefnir has also entered into agreements with a number of partnerships limited by shares on behalf of its clients. Stefnir had 22 employees at the end of 2019.

Assets under management
ISK bn.

Assets under management decreased by approximately ISK 79 billion, from approximately ISK 331 billion to ISK 252 billion. The key factor behind this decrease was the closure of the ISK 98 billion institutional investor fund ABMIIF at the beginning of the year. If this is taken to account, assets under management at Stefnir increased by almost ISK 19 billion during the year. All classes generated strong returns, which largely explains this asset growth. Assets under management are well distributed between asset classes and the company’s revenue structure is in line with the board's objectives.

Strong returns in 2019

The funds generated strong returns in all asset classes in 2019. Domestic and international equities markets performed particularly strongly compared with other asset classes. The Icelandic equities fund Stefnir – Icelandic Growth Fund gained more than 19% during the year. International equities markets made substantial gains despite considerable volatility, a fact clearly illustrated by the international equities fund KF Global Value, managed by Stefnir, which climbed more than 31% during the year.

Fixed income funds also enjoyed an excellent year, mainly due to falling yields combined with Central Bank interest cuts during the year. Mixed funds benefited from strongly performing equities and bonds and generated satisfactory returns for fund members.

Responsible investment and the role of Stefnir

Stefnir’s role is to manage its clients’ assets as best serves their interest. 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 for Stefnir funds in December 2018 and it was implemented in 2019. Stefnir’s first progress report to PRI (UN Principles for Responsible Investment) was submitted during the year and this will enable investors to keep track of the company's progress and compliance with the Principles for Responsible Investment.

Strategy and corporate governance

The employees and board of directors have endeavoured to define the company’s core competences and the board has set a performance benchmark for the company which is measured on a regular basis. The board of directors of Stefnir is committed to good corporate governance and has resolved to promote responsible behaviour and corporate culture at Stefnir for the benefit of all the company’s stakeholders.

The company publishes a corporate governance statement on its website once a year, describing its activities and its focuses in the near term. Transparency is paramount and this is reflected by the strong focus on detailed disclosure on the company's website. This disclosure of information is far more extensive than legally required.

Private equity investments at Stefnir

Stefnir operates and manages both Icelandic and international private equity funds and the major fund owners are pension funds, insurance companies and other financial institutions. The private equity fund SÍA III slhf. invested in two companies during the year, Lyfja hf. and Men&Mice hf. The private equity fund SÍA II slhf. delivered its shares in Festi to the fund's owners at the end of the year, bringing a hugely successful investment project to a conclusion.

Access to international markets through Stefnir funds

Stefnir occupies a strong position as a manager of international equity funds in Iceland. Stefnir employs a team of highly experienced experts on the international financial markets. The team’s methods and its approach to managing international equities funds have won acclaim for its excellent results in recent years. International funds managed by Stefnir are an attractive option for diversifying risk for Icelandic investors and savers.