By Hamlin Lovell, NordicInvestor

Eric Penser Bank’s Head of Asset Management, Jonas Thulin, has an impressive forecasting track record. He is more bullish than consensus on the US economy and US equity market, but is avoiding Nordic and European equities. He is also extremely selective about which equity strategies he picks from a universe of 56,000 strategies, funds and ETFs screened globally.

Eric Penser Bank runs c. SEK 37 billion, and all of this is allocated externally to around 10 managers, including ETFs. Retail and institutional clients can access the same strategies, through building blocks of asset class modules customized to their needs. Managers can be based in the US, UK or Sweden, but could come from anywhere.
We want to find the most competitive products out there”, says Thulin.

Thulin produces a weekly chart pack, available online, and Youtube videos (in Swedish) setting out his macro views and preferred equity strategies. He went public calling the trough in equities on March 24th, 2020, based on his in-house models, and has since then built up more confidence in more aggressively overweighting equities: a lot of bad news was priced in and the next step is to see a trough in economic activity. We monitor hundreds of datapoints in the US, including ISM and PMI surveys, and credit card and retail data, and reckon the trough has been reached. Consensus forecasts for second quarter GDP of -34% are too bearish. The market is all about second derivatives, and the data is likely to surprise on the upside.  Thulin points out that US data is getting better, and most US job layoffs are temporary, something that has historically been associated with fast economic recoveries. Globally, he is encouraged to see record numbers of central banks cutting interest rates and introducing or expanding quantitative easing (QE) programs to record levels (outside Europe), which suggests that investors should not “fight the Fed”. He is also somewhat optimistic that a Coronavirus vaccine will be found. It seems as if the consensus is now to forecast that a V shaped recovery will be impossible – and Thulin would agree for Europe’s economy – but he has some confidence that the US and China could make strong and rapid recoveries.

Thulin has been honing and refining these models over a 20-year career that started in Stockholm and has come back home after spells in London and New York at Credit Agricole CIB. Early in my career I predicted the 2000 TMT crash while at Ericsson, and later called the 2008 crash, which was not really a black swan – it was a classic US recession originating from the housing market and consumers, but accentuated by the financial crisis”, he recalls. Another more recent market call was rejecting fears of trade war and global recession and buying equities over Christmas 2018. Bloomberg has given Eric Penser Bank some of the highest ratings for the accuracy of its forecasts of various US and Chinese economic data measures.

Now in early 2020, Thulin recognizes that the Great Coronavirus Crisis (GCC) probably will lead to some degree of deglobalization, but a more important theme could be the Great Divergence (GD), which this only increases the need to pick the winners. A great divergence between fiscal and monetary policy in the US and Asia versus Europe, argues in favour of the US and China making much quicker and stronger rebounds than Europe. The US is a year ahead of Europe”. Only one European equity strategy appeared in the top 100 out of the 55,000 strategies Thulin screens, and that ranking was not high enough to earn it an investment.

Equity strategies

Thulin expects that the natural consequence of policy stimulus should be inflation by 2021, but currently, inflation is not a key theme for the selection of his equity strategies, which are ahead of the MSCI World by about 9% over year to date up to May 22. Traditional style and factor analysis is not particularly important either. Though most of the equity strategies do have a “growth” flavour, the selection is much more granular and precise than big picture factors.

Some of the sixteen strategies allocated to can however be categorized under several bigger themes: technology; healthcare; and fundamental stock selection of US equities.

Strategies under the broader technology umbrella include broader exposure to US technology, but also much more narrowly focused sub-sectors. There is a Fintech strategy; Video Games and E Sports; a thematic strategy focused on robotics, autonomous cars, 3D printing and AI, and a sub-sector strategy in cloud computing. Additionally, a Taiwanese equity ETF has some technology weighting, and a long online retail/short physical stores strategy in practice will own some retailers that are classified in the technology sector. Moreover, the Chinese large cap strategy has heavy exposure to local tech giants.

There are three strategies in healthcare, including Chinese healthcare; Biotech, and another thematic ETF, drilling down further into sub-sector of biotech, by looking at genomics, immunology, and bioengineering.

Fundamental stock selection strategies include one based on growth of earnings and dividends; another based on data including return on equity; and a low volatility, large cap equity strategy.

There is also a more “value” oriented strategy: a US housebuilders ETF, since Thulin expects a sharp rebound in housing in the US.


Thulin also sees value in corporate credit, and as with equities, he would rather focus on the US than Europe- but does not want to take on too much currency risk. To this end, he is keenly awaiting some new ETFs that offer exposure to US investment grade credit, with currency risk hedged back to SEK. We are less inclined to invest in Nordic credit because liquidity can be challenged”, he explains.

Tail Risk?

Indeed, the bullish fundamental data story and forecasts for US assets are underscored by the liquidity and sentiment data that Thulin watches. Therefore, it is no surprise that he is not currently worried about tail risk hedges, but they could be quite quickly introduced if the outlook changes. Thulin tends to be more reactive than pre-emptive in his approach to downside hedging: when we see something on the horizon, such as an exogenous shock or virus we may act. In late 2018 we had exposures including short EuroSTOXX, long Swiss Franc and long Gold. We have also traded the VIX index of implied volatility through a long VIX ETF for very liquid and transparent exposure”, he condludes.