As part of its supervision of management companies, Finanstilsynet investigates whether Norwegian equity funds that are marketed and priced as actively managed funds are in fact managed as such.
Finanstilsynet has analysed how DNB Asset Management AS has managed Verdipapirfondet DNB Norge over the past five years. In Finanstilsynet's assessment the company's management of the fund has diverged considerably from what the investors were led to expect. The equity fund concerned has performed very closely to its benchmark, but is marketed and priced as an actively managed fund. Finanstilsynet considers this to be censurable and counter to good business practice. The criticism is compounded by the considerable size of the fund, the fact that it targets non-professional investors, and the fact that the fund manager has maintained an annual fixed management fee that does not stand up to the way in which the fund has in real terms been managed and marketed.
Finanstilsynet has decided to impose a corrective order on DNB Asset Management AS. This order broadly requires the company to either bring the management of the fund into line with the characteristics of active management, as reflected in the fund's prospectus and the management fee, or to adjust the pricing of the fund to the management strategy that has in point of fact been applied.
DNB Asset Management AS must also inform the fund's unit holders of Finanstilsynet's conclusions and decision, and of what course of action the company opts for.