Seligson Funds

[Szanne]

Seligson’s funds have been mentioned multiple times in different threads, but not much actual discussion has taken place. Seligson is a fund house founded in the late 90s and one of the first, if not the first, pioneers of index investing in Finland. Some of the company’s funds have remained active from the 90s until today. Long-term commitment at its best.

As I understand it, Seligson long had a so-called advantage in index funds, as costs were low and banks mainly offered high-fee hidden index funds. There wasn’t much advertising, so the business didn’t exactly take off rapidly. Later, more cost-effective index funds clearly emerged, and especially Nordnet’s Superfunds were the first step in this direction.

Index funds are available geographically for major markets. Also, Finland’s only ETF, OMXH25, is Seligson’s. There are also a few active funds, and through partners, a few funds investing in exotic markets. A few bond funds are available, and it also seems to be Finland’s only money market fund today.

Currently, Seligson is owned by Lähitapiola, but the current funds should remain. An app is also available for phones now. Also renowned is the quarterly information magazine, which contains a few columns, fund information, and news.

Older generation investors surely have these Seligson funds, but what about others? What thoughts does Seligson evoke in general? Is it still up-to-date and will it be alive in 20 years? Personally, I’d be interested to hear thoughts on those Russia and Latin America funds; would it be sensible to invest a small amount in them, or is it better to find alternatives elsewhere?

seligson.fi

[xlat]

I became a client of Seligson in the late 90s, and from those days, I still have the Phoebus fund I acquired in 2001. An excellent company, great customer service, and a good focus on the right things. The quarterly fund reviews are full of timeless information.

The Russia fund is an active fund, which in those markets makes a certain kind of sense, as the markets are not entirely efficient. I was involved with it in the early 2000s, when the fund’s returns were astonishing; its value multiplied tenfold in a relatively short time. At a certain point, I completely divested from my Russian investments and moved to other markets, so unfortunately, I don’t have any further insight regarding the Russia fund.

Anders Oldenburg, the portfolio manager of the Phoebus fund, maintains an interesting blog*, which many are surely familiar with. It’s full of valuable content as well.

An excellent company, I am very satisfied; my investment returns would have been significantly worse without Seligson’s reviews, blogs, and other resources, from which I have learned a lot about investing. These lessons can also be applied to investments outside of Seligson.

*Link to the blog: Phoebus – Seligson

[Lars74]

For a long time, Seligson was the one house I recommended to people who wanted to start turning their savings into passive investments.

Now the competitive landscape has changed a bit; Nordnet’s funds are affordable, and the possibilities are wider. On the other hand, some banks might offer more favorable treatment if the funds are with them (unless they are in something like Nordea’s fund of very expensive funds, in which case nothing is left for oneself, of course).

The arrival of the Equity Savings Account (OST) has also slightly changed what should be opened for children. Kela (the Social Insurance Institution of Finland) does not look favorably on owning securities or funds, so OST is probably the only hope to let the pot grow through the study years as well.

The most interesting change is this LähiTapiola (LocalTapiola) deal. Previously, one could trust Seligson regarding the future, as the vision and purpose came from the mouths of the people whose name the company bears and from their long-term proven work. I don’t have much trust in LähiTapiola, and honestly, I’m afraid they might discontinue or prevent further investments in funds that have too good terms for customers.

On the other hand, a cautious hope and optimism arise that S-Pankki (S-Bank) would allow the use of Seligson fund units as additional collateral for a housing loan. This would be an insane competitive advantage for S-Pankki if they knew how to market it.

[Prophier]

I’ve also been a satisfied customer of Seligson for over ten years. The company is certainly no longer the clear number one choice in the field of funds as it once was, at least not for the index products found in my own portfolio.

For me, the greatest added value is always the high-quality quarterly report. It exudes an unhurried, independent way of thinking and the ability to ignore market mania. I recommend it to everyone, even more so to those who invest directly in stocks rather than fund clients.

[Lohis]

My investment career started specifically with Seligson funds (direct equity investments with Nordnet). Seligson was (and probably still is) a top-notch service. I still read Anders Oldenburg’s highly praised blog in this thread.

Later, my wealth grew large enough that consolidating investments, loans, and bank accounts with a traditional bank brought so many benefits that it was worth it. Additionally, moving money between different accounts started to feel unnecessary, so all funds from Seligson have been sold, and although the bank’s funds are more expensive, considering the aforementioned benefits, I am willing to pay a bit more for them.

[VoitonTavoittelija]

My investing journey also started with Seligson funds about ten years ago. At my peak, I had several funds through them, but currently, only Global Top Brands.

Even though Seligson’s fee structure no longer competes with, for example, Nordnet’s selection, I appreciate Seligson’s role as one of the pioneers of domestic index investing. The quality of customer service, quarterly reports, and the entire company’s philosophy have also been to my liking.

I am looking forward to (and with a little fear) the changes LähiTapiola will bring to the funds and their costs.

I will continue my monthly investments in the Global Top Brands fund. When the average annual return has been over 30% for 15 years, one can only be satisfied.

[Takahuhti]

I have a Tropico LatAm fund. I believe that over time, Latin America will still rise. My only concern is that since this fund is quite small, it might eventually be merged into something else.

[Needles]

A great company, and as is surely the case for many others, my first exposure to equity funds was through Seligson. Global Brands was held for several years until the money found “better” use. I still consider Global Brands to be a good option for a larger lump sum investment if the stock market were to crash significantly. Although history is not a guarantee of future returns, Seligson’s brand fund recovered much more robustly from the financial crisis than the USA index fund and has been outperforming it ever since.

This thread is a funny coincidence, by the way. Today, my 69-year-old father unexpectedly asked if something should be done with the pile of money that had been sitting in his account for years. After researching options for a while, we decided to start cautious monthly savings in Seligson’s asset management fund, Pharos

[VasynytKonsulentti]

I have always appreciated Seligson’s transparency, good communication, and continuity in its operations. It has been the only entity one could be somewhat sure of (as sure as one can be in this industry, anyway) that if you invest in fund X, it (and its performance history) will still be around in 15-20 years. Partially for this reason, I have recommended to a small group of people to set up accounts at Seligson for their newborn children, among other things. Saving for a child, in my opinion, is especially easy with Seligson compared to many competitors. You just tell relatives and godparents the account number and reference, and tell them they can make deposits whenever they feel like it. I don’t think (?) the same is possible with Nordnet’s continuous adjustment-requiring monthly saving.

Additionally, I must, following others, bring up Anders Oldenburg’s blog. Nowadays, it feels like more and more (younger generation?) investors simply can’t just sit on their hands and do nothing. Investing has increasingly acquired speculative features; there’s always some new SPAC, WSB, tsugecoin, ESG, hypetypetothemoon instrument/company/trend that has to be traded 24/7/365. And that’s fine, everyone has their style, but still, I think Oldenburg’s blog “brings balance to The Force” and gently and analytically brings readers back to the basic elements of investing.

Regarding the future, I share user Lars74’s concern, and not only because of the LähiTapiola deal. Seligson’s main figures are no longer very young, and I am concerned about what will happen to the management of the funds after, for example, Oldenburg retires.

[Gazza]

Still an excellent fund company, even though you can now get the same options cheaply elsewhere. Top Brands and Pharma are, in my opinion, still competitive choices, and I could still add money to both. There’s also merit in actively managed funds if you trust the fund manager’s success.

Also, a plus for the excellent paper magazine four times a year. I hope they don’t stop publishing it.

[VoitonTavoittelija]

I would also like to add that I have opened portfolios for my children at Seligson, where a small sum of money is automatically transferred from online banking every month. As someone living through the busiest years of my life, I appreciate Seligson’s ease of use in this regard as well.

[Korville]

Tropico was interesting, but then I looked at what’s inside: A true “anti-ESG” fund, as it contains mining companies, airlines, shopping mall owners, which are considered some of the biggest villains in the world… It doesn’t suit my morals, so I sold it at a loss.

[miljonaariksi]

I have been reading this forum regularly and irregularly for years, and now I finally decided to register.

Back in 2014, inspired by Marko Erola’s book Paras sijoitus (Talentum, 2009), I switched from my bank’s expensive combination funds (2.5% fees) to Seligson’s low-cost index funds. I have not regretted that decision.

The best thing about Seligson is its stability and lack of impulsiveness. Most of their funds date back to the late 90s or early 00s, and investors can genuinely trust that their historical performance has not been artificially enhanced by merging funds, liquidating underperforming ones, and establishing new ones. Seligson’s quarterly reports are also consistently excellent reading year after year. They effectively bring investors back down to earth amidst market noise.

Ten years ago, Seligson was one of the only fund companies offering index funds. Since then, competition has intensified significantly. I myself opened an investment portfolio at Nordnet in 2016, and since then, additional purchases have gradually been centralized there. Zero-fee funds are just such a great deal.

Despite everything, Seligson still has a couple of competitive advantages in the current market. One of them is its long-term perspective. For example, no one knows how long Nordnet’s Nordic funds, which serve as loss leaders, will remain fee-free. The Denmark fund already introduced a 0.20% management fee. The situation can change suddenly.

Seligson’s second advantage is that an investor can, with a single notification, convert their growth shares into income shares that pay out dividends. To my knowledge, not many have this advantage.

In theory, an investor can therefore never pay tax on their capital, the interest accrued on it (dividends), and the interest on the interest (dividends of dividends) with Seligson. This enables capital growth in a completely different way than, for example, in direct stock investments, even though the equity savings account brings some relief in that area.

[Bjorninen]

Of course, it must be remembered that even Seligson’s funds have not been immutable. The index funds changed from regular indexes to SRI indexes sometime in the late 2000s, perhaps around 2007 or so.

And Seligson also discontinued the poorly performing APS Far East fund and replaced it with an Asia Index Fund.

Edit: It turned out that APS and the Japan Index Fund merged into a new Asia Index Fund when the former Japan fund started investing elsewhere in Asia as well.

[Szanne]

Sometimes I’ve read that when switching from a growth share to an income share, you have to pay taxes in between. I’m not entirely sure about this, so I’d be happy to hear definitive information.

[miljonaariksi]

Yes, APS and Japan were merged, creating the Asia index fund. In the new fund, Japan’s share has long remained at 52%, which is why I have never invested in it with a very large weighting. I don’t see any reason to emphasize Japan in my investments.

Due to changed regulations, the Emerging Markets fund also became a “fund of funds” a few years ago.

Some years ago, Seligson’s funds also started tracking ESG (Environmental, Social, and Governance) indices. Nordnet and others have since followed suit.

So yes, there have been changes, there’s no getting around that. Still, the funds have consistently followed the market development of their target markets over the long term, even though the benchmark index has changed a couple of times along the way.

@Szanne:

Growth units can be exchanged for income units – and vice versa – without tax consequences.

Kasvu- vai tuotto-osuus – Seligson

[M-H]

Seligson’s Asia Fund is also one of the few that doesn’t seem to have any China exposure, except for Hong Kong. And Australia’s share isn’t very high in many funds either. How well this reflects Asia as a market is perhaps a slightly different matter. But it’s better this way, at least in my opinion.
I also like the firm because there are few fund houses that offer funds with a specific “idea”. I’m referring here especially to Phoebus and Phoenix, i.e., Family Companies. The idea behind both funds appeals to me greatly when it comes to this kind of passive-active stock picking. There aren’t too many boutique firms with a sharp focus and a sensible minimum subscription/fee structure.

I am, of course, still a little concerned about the effects of the LähiTapiola deal on the feelings and dedication of Seligson’s employees. It would be a shame if Seligson became just another generic, slick-haired fund house.

[miljonaariksi]

Yes, that’s right. The Asia fund clearly focuses on developed markets, so the name might not be the best possible.

The Emerging Markets fund includes China. Its largest investments by country are:

• China 29%
• Taiwan 17.43%
• India 12.75%
• Korea 10.81%
• Brazil 4.48%
• South Africa 3.61%
• Hong Kong 2.96%
  (- Russia 2.54%)

Phoebus is indeed an excellent fund. Oldenburg is one of the few portfolio managers with a proven track record of beating the benchmark index for over 10 years. Oldenburg’s blog and fund review are always read with great interest.

Family businesses are also interesting. After some initial fumbling, the fund finally found a direction that allows it to achieve a genuine competitive advantage in the market.

[tobben]

When considering income units, it is also worth remembering that if the dividends received from funds in a year are less than one thousand euros, it is more advantageous from a tax perspective to own growth units and create the dividend yourself by selling the fund.

In this case, no other securities sales (including real estate sales) should be made during the year. The capital gain is tax-exempt if the total sales prices of all assets disposed of during the tax year are no more than 1,000 euros.

Example:

• Funds with income units: Fund holdings of 30,000 €, with a 3% dividend yield, you receive 900 € in dividends. From this, you pay 30% capital gains tax, meaning you are left with 900 - 270 = 630 €.

• Funds with growth units: You sell 900 euros worth of fund units, and the entire 900 euros remains in your hand. Tax benefit 900 - 630 = 270 euros.

[Qwerty123]

Is that a slight simplification of the matter, even if it works well for one year?

In such a calculation, I understand one also needs to consider what happens over time, because with income units, the number of fund units remains the same, while with growth units, it starts to decrease.

Assuming the fund’s development is perfectly linear, after, say, ten years, about €22,000 would remain in growth units, and the 3% “dividend” generated by sales would still be €684.21, which is still more than with income units. The situation reverses at the 13-year mark, where only about €20,000 of capital remains after annual “dividend sales,” and the own dividend from 3% sales is €624.46.

Of course, this can be refined almost endlessly in the desired direction, for example, by making the same €630 sale annually with growth units, which would reduce the capital more slowly. Conversely, with growth units, one can choose not to withdraw “dividends” at all in some years.

Then, considering the change in the fund’s value, the problem arises that with income units, one gets a larger amount of euros from an increasing value because there are more fund units after several years. Correspondingly, for users of growth units, a decrease in value is smaller in euro terms, as there are no longer as many declining units left.

It might be that growth units are more profitable, but are they always so in different scenarios? It seems to be quite a challenging calculation with different assumptions, if my conclusions have any practical value at all.