The crisis in Ukraine and investment outlook


In the last few weeks, our operating environment has changed significantly, and in some ways, also permanently. We are forced to watch the inhumane events that are causing Ukrainian citizens to suffer. The crisis will also have a concrete impact on the Nordics – possibly for a long time to come. We need to prepare for the fact that there will be ongoing threats and sanctions from relations and trade with our Eastern neighbour.

In these situations, we face key questions regarding our investment activities. We feel that our responsibility in this situation is to first protect our capital and actively manage our funds while accounting for appropriate risks. In addition to Sampo Group’s assets, our assets under management include capital from Nordic foundations, pension funds, organizations, family offices as well as local individuals.

Russia’s weight in our investment portfolio has historically been quite marginal. This is partly due to our investment approach: we invest in and lend to companies whose operations and risks we have thoroughly reviewed. When investing in our various strategies, we primarily select partners who operate in developed markets and have similar operating principles. We are, however, accounting for the potential diverse and indirect effects coming out of this crisis.

Uncertainty in pricing alone leads to a higher risk premium for investments, which can be seen in the share prices of many Nordic companies. This also brings a lot of opportunities for long-term investors, not just in listed markets, but also in more riskier asset classes. As a long-term investor, we are often able to increase our investments into familiar investment strategies in these situations, including European corporate loans, as an example.

In addition to the re-pricing of risk, the continuation of the crisis will have an impact on the real economy and inflation. Commodity price inflation is already a reality, and there is also a threat for a wider slowdown in globalization and a disruption to efficient production chains. In part, this is a continuation of the developments resulting from the COVID-19 crisis, but the recovery of central banks and governments have so far supported the real economy and significantly raised the prices of assets. The biggest question now is the flexibility of central banks and states. We don’t have a crystal ball for this situation, but we trust our approach to invest in this environment as well.

How do we invest now?

A large part of our fixed income allocation is floating rate bond and debt investments, given that in a low interest rate environment, floating rate instruments offer the best way to hedge against inflation and rising interest rates. In addition, given our focus on private debt investments, we continue to stress the importance of patience and diversification. We have historically invested in a broad range of strategies, and our portfolio includes opportunistic strategies that tend to benefit from market stressors.

The possible increase in interest rate and risk premiums favour investment strategies with higher cash flows, where returns are not focused on sale prices, i.e. exit valuations. In this situation, the most vulnerable strategies are, for example, low cash flow generating real estate investments or IPO-dependent buyout strategies. We believe that fast-growing, disruptive and unlisted companies will continue to grow significantly and faster than the economy and be less exposed to the effects of the current market environment. In addition, listed equities offer many opportunities, now and in the future, for long-term investors.

In the midst of this, responsible investing has been left slightly on the back burner. It is possible that responsible investment policies will be adapted to better react to the current situation. For example, the energy and defence sectors, which are strategically important to the West, will need to be re-evaluated. We have always focused on investing in high quality, responsible Western companies, and we will continue to do so.

The investment outlook is now quite foggy: for the time being, it is challenging to assess the impact of the current sanctions on economic growth, inflation and monetary policy. In addition, it is difficult to predict the course of geopolitical crises as the situation can rapidly change. As a result, we are avoiding any quick and hasty changes or decisions. Sufficient cash and uncalled capital across our strategies provides us with the ability to react quickly, as necessary, when opportunities arise.

Mandatum supports Ukraine

While we continue to monitor the current situation and its potential effects, we believe that it is critical to provide our support to the Ukrainian people. Mandatum Group has launched a donation campaign, the proceeds of which will be donated to humanitarian aid in Ukraine.

Mandatum Group will make a base donation of EUR 100,000 and challenge its own staff to increase the donation pot. Mandatum Group’s employees, i.e. Mandatum Asset Management and Mandatum Life staff, will be able to make an additional personal donation or donations, based on which the company will further double the donations of personnel up to EUR 100,000.

Mandatum Group's donations are channelled through UNICEF and the Finnish Red Cross Disaster Relief Fund to humanitarian aid in Ukraine.


Lauri Vaittinen, CEO, Mandatum Asset Management,, tel. +358 (0) 50 382 1674

Ville Talasmäki, CIO, Mandatum Asset Management,, tel. +358 (0) 50 597 0046