As he would no doubt be the first to tell you, Fredrik Nerbrand does not do things by halves. The comment, which Nerbrand makes more than once, could apply equally to him running an Antarctic marathon in a blizzard as to the reams of investment strategy reports that he reels off for his company.
At the tender age of 34, Nerbrand finds himself based at HSBC’s impressive London headquarters, which used to house the Conservative Club, directing investment strategy and influencing investment decisions for an organisation with $352 billion (£221 billion) of net client assets.
The Swede has had a meteoric rise to become HSBC Private Bank’s managing director and head of global investment strategy but that is perhaps fitting, given his single-minded approach to things.
It is rare to find someone that knew from the age of six exactly what they wanted to do, and rarer still to find someone that stayed faithful to it.
‘I knew from a very early age what I wanted to do. By the age of 15 I had already got my subscription to The Economist,’ he deadpans.
Nerbrand’s world clearly has a sense of order to it. He gained a BSc in maths and economics, followed by an MSc in economics and business administration at Sweden’s Lund University. Along with Uppsala, it makes up the Swedish equivalent of Oxford and Cambridge, he says. ‘I was the seventh generation of my family to go there and my mother still works there.’
Nerbrand is immediately at ease and speaks in clear matter-of-fact tones that do not mask his dry wit and keen sense of humour.
His language is concise as one might expect from someone who flies around the globe to meet the private bank’s most important ultra-high net worth clients to explain his latest investment thinking.
He is just back from a trip to Kazakhstan visiting one particularly significant client, although he is at pains to keep the big fish’s identity anonymous. Could it have been a rich oligarch, or an oil tycoon maybe?
‘Perhaps it could be something like that,’ he smiles enigmatically before changing the subject.
Nerbrand started out in his chosen field doing equity sales at Swedbank Private Bank but as already established, he does not stay still for long. He quickly decided he wanted to put his analytical brain to work on ‘something more quantitative.’
He took a role as a quants analyst at software group Simcorp before deciding that he wanted more face to face contact.
‘I realised I wanted to do more than than just purely producing models. Most of my clients were large asset managers but I thought they did not have much contact with the end client.’
Nerbrand had enjoyed his private client work while at Swedbank and soon made the switch to JP Morgan Private Bank, where he advised clients on strategic asset allocation and portfolio construction.
It was not long before he found himself attracted to HSBC Private Bank where he saw more opportunities to continue his career. He was made senior strategist for the UK business but soon was expanding his role.
Nerbrand had already indulged his interest in economic writing by contributing a regular column in Sweden’s equivalent of the Financial Times, the now defunct Finanstidningen.
By January 2007, he had been promoted to head of global strategy and continued to collate best ideas from around the bank’s international network of offices.
Nerbrand works closely with the group’s various asset class heads, including Hong Kong-based head of fixed income Edward Chan, as well as global equities head Thomas Moore in New York and chief investment officer Nigel Webber, who is based with his team in London.
The London team is a close knit group, including Webber, head of equity strategy James Butterfill, Esty Dwek and a recent recruit from Dresdner, Willem Sels, who looks after the team’s fixed income strategy.
Nerbrand half-jokes that he sees more of them than of his wife, describing the team as HSBC Private Bank’s ‘nerve centre’ for global investment strategy.
Nerbrand’s main written contribution comes in the form of the quarterly investment outlook. The worth of this weighty tome is evident in the fact it is translated into Japanese, Spanish, Portuguese and shortly, also Chinese.
It is while talking about his macro economic calls here that his analytical mind and talent for calling such scenarios comes to the fore. ‘I was very pleased that in my first quarterly outlook I talked about investors moving from the era of abundant liquidity to more sensible risk premiums,’ he says.
Nerbrand admits the process happened more quickly than he anticipated but says he ‘never bought into that end of the world scenario’ many were predicting last year. He reels off a number of dates that mark when his view on key investment processes changed.
‘On 26 January 2008 we became more positive on corporate credit and on 28 March we became more positive on equities. Even before this we were already neutral on equities and had been calling for “baby steps” back into the asset class.’
Nerbrand proposes the bank’s asset allocation, which is then ratified by an investment committee chaired by him and attended by some of the bank’s senior investment specialists.
The vast majority of client portfolios tend to be held in ETFs although occasionally Nerbrand will opt for third-party managers.
Characteristically, he does not mince his words. ‘I have not been very impressed by long-only managers’ ability to produce alpha. What many have said they would do has not really happened.’
And, he says, some of the bank’s clients are also aware of the disparity. ‘I get asked: “Why should I pay you to do this?”’
He argues that ETFs are cheaper, supporting this by pointing out global markets have been driven by top-down macro economics for the past three years.
‘Going forward, it will predominantly be macro events continuing to drive market returns,’ he adds.
He does not rule out opportunities to source bottom-up stock ideas for his clients, which is why the remainder of the portfolios are given to hedge fund managers.
*For the rest of the interview with Fredrik Nerbrand, please see this week's Citywire Wealth Manager