Helena Hillström is the CEO of Swedish fund management company Didner & Gerge, with 60 billion SEK under management. Emma Westlin Forsberg is vice head of the administration – where Helena began her work in the 1990s as the company’s employee number one. Meet them in a talk about their all-inhouse post-trade model, and how it has developed into a cornerstone of the firm’s strategy. 

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“There has been a monumental change in this market since we started back in the 1990s,” says CEO Helena Hillström.

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“I should honestly confess that I wouldn’t make it for a single day in our administration department. Nowadays their work has become so complex and qualified I’d be completely lost,” she jokes. 

“But having my background there, and grasping the full flow within the firm, is invaluable to me.”

Founders Henrik Didner and Adam Gerge had done their own post-trade administration tasks for their company’s three first years, before they hired Helena as their first recruit in 1997.

“They managed the fund – and then they sat there registering it all by themselves, sending the slips to the clients and everything.”

Not just an anecdote

Helena Hillström refers to it as “a funny anecdote”, an impossible scenario under the massive regulation that has since come to specify how things can be done or not at a fund manager. But as her story develops, it becomes clear that it is more than an anecdote. It is the origin of a let’s-do-it-our-own-way fund management organization, today featuring 29 employees. 

“I think we have kept this entrepreneurial spirit in us. You try to improve on what you do, all the time. And since we are able to do this continuously, without much hassle, I believe that this is amplified and reaches the whole organization. It could be that a printer should be placed in a different corner, or that the NAV should be set by an improved process; it covers the whole range.”

I think we have kept this entrepreneurial spirit in us. You try to improve on what you do, all the time.

Helena Hillström

“Yes, exactly,” Emma Westlin Forsberg fills in. “And that is why I believe that many stay to work with us for long: the feeling that you can really contribute to the development if you have a good idea. For example, our head of administration and our head of compliance have both worked here for over 20 years.”

We will come back soon to the strategy of keeping the admin inhouse. But let’s first observe that Didner & Gerge is unafraid of differentiating itself in many aspects. It is an independent fund manager, performing highly active management of its assets, engaging strongly also in the management of its target firms. Each of its five funds is managed not by one fund manager but two – to get more angles covered through their dialogue internally. Then, the firm stands out by keeping its head office at clear distance from Sweden’s financial centre in Stockholm – 70 km north of it, in Uppsala.

Investments became global

Emma Westlin Forsberg is the vice head of administration today, a department of nine people. When she joined the firm in 2010, it housed two funds, both focusing on domestic Swedish investments.

“A big shift over these ten years is that we now have three more funds, investing globally. That requires a lot of administration and it has been interesting to be a part of that development,” she says. 

Other influential events include the introduction of ever-tighter EU regulation, including know-your-customer and anti-money-laundry processes. And then in 2019, an order-routing system was implemented – to streamline transactions that go through distributors who offer the Didner & Gerge funds to their clients. An improvement that could be up next is a more automated NAV-setting workflow. Emma Westlin Forsberg has just started to compile her list of feasible solutions for the purpose.

Stays close to the client

Helena Hillström and Emma Westlin Forsberg can list a number of advantages to their in-house setup, but they keep coming back to the single-most important one: the sense of closeness for the customers. 

“Since I answer the phone every day, I know how much our clients appreciate our accessibility. And the client is our focus. It is a pleasure to be able to offer that level of service,” says Emma Westlin Forsberg.

“We have worked for many years according to the idea that everybody working in the administration should know everything.”

Emma Westlin Forsberg

The company is a pure-play fund management company – having no license to advise on investments, nor intending to get one. A large part of the investors hold their units through their banks and fund distributors’ on-line platforms, and will most often call those actors for their customer service. Even so, Didner & Gerge has nearly 16,000 direct clients of its own.

“We have worked for many years according to the idea that everybody working in the administration should know everything,” says Emma Westlin Forsberg about their now nine-employee department.  

“But with the growth of the global assets, the increasing order handling through distributors and the number of clients, we decided to split it into two parts after the summer 2020.”

While a number of tasks can fall on staff from either part, the basic idea is that a back-office group now handles the fund unit transactions on the client side, while a middle office administrates the investment-side assets.

A venerable Excel sheet

Reconciliations of data are performed in series – first internally between team members who work in parallell, then between systems and against banks. Technically, the work is then complete. But Didner & Gerge chooses to keep an extra safety measure: a spreadsheet template into which the balances are looped for a final double check.

“We do that to catch what could potentially have gone wrong. If there would be any issue we would stop it there before it reached the client,” says Emma Westlin Forsberg. 

Helena Hillström points to the document’s quarter-century history: 

“It is a funny thing that this Excel sheet has followed us from the beginning and still lives on. It takes a lot of time to fill it in, and it has been discussed a number of times that it would be nice to get rid of it. But we feel that it gives such a quality advantage, going on with this hassle.”

Inhouse model was challenged

As Didner & Gerge started out in the 1990s, there were not really any alternatives to doing the administration inhouse. 

“So it was not even a strategic question at the time. That’s just how it was,” says Helena Hillström. 

“And then we kept building on it, on doing it ourselves. It was only after quite a few years that this whole market boomed. The fund hotels and everything were becoming much more common, and the requirements were getting so much more complex. You need more resources, more personnel, more roles, and so on. So if you start a fund management company today, it’s natural that you look at the alternatives for the administration and risks, regulations … everything. It came to the point where even we were considering it for ourselves, and quite a few providers were approaching us. But for us, the inhouse solution has constantly turned out to be the obvious choice. 

No conflict with automation

Helena Hillström stresses that she speaks uniquely for her own firm, making no generalisations about how other fund managers ought to navigate. But it is evident that for Didner & Gerge, she sees no conflict between the small size and the big challenges around regulation and processing systems.

Automation and digitalisation are important issues for us, and they are under constant discussion. Everything that makes the work easier is good and we need to take those steps. The more we can do of it, the better. 

Helena Hillström

“That’s a great advantage of being smaller. We can be very quick-footed. Once we realize we want to do something we are able to just do it; things don’t necessarily need to go through committees or task forces or references groups.”

The same goes for automation. 

“Automation and digitalisation are important issues for us, and they are under constant discussion. Everything that makes the work easier is good and we need to take those steps. The more we can do of it, the better. Then that is not a thing you accomplish in a Friday afternoon. Many systems need to speak with each other and many types of reconciliations need to be possible,” says Helena Hillström. 

“That is something we try to build in as far as we can, into the administration that we are keeping here. There is no conflict in this whatsoever.”

Helena Hillström mentions that she is generally restrictive about accepting interview requests, but her firm’s administration is a thing she is happy to spotlight publicly. 

“I am incredibly proud of it. I think it is fantastic that we have it inhouse – and I know what quality we have and what work goes into it.”