Investor Return as a Numeric Indicator for Customers

In the times, when portfolio managers are highly criticized for chronically losing their benchmark indexes and European Union is reforming its policies on financial companies’ transparency, the asset management companies should strengthen the relationships with stakeholder groups. Customers are one of the most important stakeholder groups for financial companies and their knowledge about investing is growing. As it grows, they realize that the most important matter for them to know is how much money they will earn from the funds. This is why it is important for financial companies to offer customers more alternatives for estimating the risks and returns from the funds.

Fund Return is a standardized way for asset management companies to show the performance of the funds. It is a geometrical figure, which shows the performance of one currency unit during a measured era. Generally, the figure includes a benchmark index to which the fund return is compared. Below is an example of a Fund Return indicator with its Benchmark Index.

HCP Focus – Historical Performance of the Fund Compared to its Benchmark Index.


The purpose of the thesis is to find out whether Finnish asset management companies use Investor Return as an indicator to measure customers’ income in euros. My own assumption was that asset management companies do not use the indicator in any way. In the thesis, I interviewed staff from several asset management companies. All in all five companies agreed to give an interview. Two CEOs, two portfolio managers and one manager of development and growth took part in the research.

The outcome of the interviews was that all the participants were familiar with the idea of Investor Return. One CEO uses the indicator to show the performance of funds customer-specifically. Also, one of the portfolio managers told that in a company he worked before they used the indicator as a part of “superior portfolio report” shown customer-specifically.

None of the companies the interviewees represented were using Investor Return in ads and brochures of their funds. One of the interviewees noted that the indicator would be too complicated for customers to understand. He thought that customers need to know all the useful information on the funds but in a clear and understandable way. Another interviewee said, that he would recommend the indicator only for professional customers who understand the idea and terminology of the matter. Also, one interviewee raised a broader problem of the indicator. He thought, that since the portfolio managers are often compared to benchmark indexes, Investor Return wouldn’t be comparable to any indexes and this why it wouldn’t be a useful tool to compare portfolio managers’ performance.

The most important point of the theories in the thesis is the debate between two different ways of measuring the performance of the funds. Investor Return is a good tool to tell the customer how the average investor performed during an era. However, it’s not the best tool to measure the performance of portfolio managers. Portfolio manager can’t control the asset flow in and out of the fund. This why Fund Return shows the performance of the manager better compared to Investor Return.

Customers’ returns from the funds lag the fund returns globally, which is shown in Morningstar’s Mind the Gap (2017) research. Fund Return indicator is not affected by investors’ timing ability. Then again, Investor Return indicator is. Below is a figure, where one can see the reason for investors losing money also in a well-performing fund. The Fund Return only shows how one currency unit has performed during an era. It doesn’t show how investors in the fund have performed during the same era. This is how Investor Return would show different data in a well-performing fund, in which investors make net losses.

Investor Return

Investors’ net losses in a well-performing fund.

The figure leads to the main points of the conclusions. In my opinion, one of the most important tasks for an asset manager is to counsel the customer in investment decisions. The manager should consider the risks of the investment with the customer for example in a sales negotiation. Investor Return would be a good figure to show the customer to point out the importance of a customer’s timing in the fund. The indicator would be useful when the risks of the funds are discussed. Also, it would give the customer a chance for broad observation of the fund’s performance if the Fund Return is shown to the customers with the Investor Return. The combination of the two indicators would show the performance in a diversified way. A Customer would be able to make more considered investment decisions after seeing, how other customers have performed in the fund.

In addition to the matter that Investor Return would calm customers’ desires to buy and sell when the markets are changing, the indicator shows the reality in the historical performance of funds. Theories of the thesis brought up a question of merging funds. Funds are being merged sometimes as a result for asset management companies needs to arrange and organize the funds. The criticism of the funds’ merging showed that sometimes the companies are willing to hide the past performance of the funds. By showing only the Fund Return indicator this kind of procedure would be possible. If the Investor Return indicator would be shown with a merged fund, it would show the true returns behind the new merged product.

Investor Return is an indicator which shows the average investor’s income in euros. If it were shown for the customer fund-specifically with the Fund Return indicator, it would give a comprehensive picture of the fund’s performance. With the help of an asset manager, the indicator would be easily understood, and it would give precious information to the customer. Also, the indicator could lead to longer-lasting customer relationships for the asset management companies.

My suggestion for Helsinki Capital Partners is that they should use the Investor Return indicator fund-specifically in funds’ ads and brochures. It would also be good to show the indicator fund-specifically in annual reports.

About the Author

”I did my internship at Helsinki Capital Partners in summer 2018. It was an extremely interesting and educating experience. My interest in the financial sector was greatly increased during the summer and I decided to write my thesis for the company. I’m studying my fourth year of International Business in Vaasa University of Applied Sciences. Due to the extended scale of the program, it was relieving to notice my passion for finance.

As I was asking the subject for my thesis from HCP’s CEO, Tommi Kemppainen, he responded before I could even finish my sentence. The title came to be Investor Return as a Numeric Indicator for Stakeholder Group Customers. Tommi noted that a responsible company must take care of its stakeholder groups and especially its customers. The main purpose of the funds is to create good returns on a rational risk for customers, and therefore, Investor Return is one of the most interesting numerical indicators.”

— Ristomatti Jönkkäri

Comments from the CEO

”We are grateful for the analysis by Risto-Matti. For us, it is important to follow that our three funds create monetary value for our clients. As of 31.12.2017, the investor return is now a total of 18.9 mln euros. We have yet not published this data more frequent nor on fund level as we think the consept is still novell for many and there is a risk of misunderstanding. We are looking to build on this first step which is publishing the aggregate number of euros created to clients since inception.”

– Tommi Kemppainen, CEO

How do you plan to avoid losses in a recession?

Making an economic forecast is difficult. How long until we face the next recession, no one knows. One thing is certain, though. Companies, governments, and consumers have more debt than ever before. To make sure everyone has a maximum amount of debt, we already once had interest rates down at zero.

On the video above, the HCP Black Portfolio Manager Tommi Kemppainen discusses why it is important to be defensive in the current market situation. The video is subtitled in English.

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The GDP Growth is Based on Debt

In normal economic conditions, the GDP grows if the working population grows or the productivity increases. In Western countries, however, the population is aging and the dependency ratio weakens fast. The productivity, on the other hand, is something that is hard to increase rapidly.

The GDP growth that we have experienced during the last decades is largely based on debt. Consumers, companies, and governments have been borrowing money and we have achieved GDP growth with credit spending.

Why Should One Worry About a Recession Now?

Many may think that there was a lot of debt already back in 2007. As the stock exchanges around the world survived the crash that began in 2007, why wouldn’t we be able to turn on the plus side now, in 2018? Has something changed? A high amount of debt and higher-than-average stock valuations continue to be true in the world economy in 2018.

The difference compared to 2007 is that we now lack the possibility to cut interest rates in order to revive the economy. That remedy was used up by the Fed and the European Central Bank already in the 2007–2009 stock market crash when they dropped interest rates to zero.

A Historical Reminder

”Sooner or later a crash is coming and it may be terrific” – Roger Babson

An American entrepreneur Roger Babson (1875–1967)  foresaw the Great Depression that started on Wall Street in 1929. Babson was first two years and then one year too early. Then he was right on time. Being defensive two years before Black Friday, Babson missed a 100% rise, but after the market had fallen back to the levels of two years before, it still fell another 75%. Babson also missed this fall.

Very often, there is news about how dangerous it is if you miss the top ten days in the market. But a lesser-known fact is that, if you manage to stay out of the market the worst ten days in this period, you might come out as a winner from a recession.

Invest Defensively with HCP Black

The multi-strategy, multi-style fund HCP Black aims for the best risk-adjusted return through active diversification. HCP Black fund is already positioned defensively. Even so defensively that if the market now fell dramatically, it’s likely that the value of HCP Black would rise.

The majority of the portfolio is made up of investments that should be as different from each other as possible. That is why no single shock should affect all investments at the same time. Therefore, gaining returns should be possible also during a recession.

HCP Black Allocation

HCP Black Allocation

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This text is edited by Miika Koskela based on Tommi Kemppainen’s collected articles from 2015–2018. Read all the articles on HCP Black Blog.

An Asset Manager with a Mission to Redefine the Financial Sector

What makes a good asset manager? Obviously, an asset manager has to generate added value to the customer. What if we said it’s not enough? A great asset manager generates added value to all its stakeholders.

At Helsinki Capital Partners (HCP), we combine top-notch investing skills, transparent pricing, and respect for clients with work on improving the well-being of society. Investing in our funds is impact investing.

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First Asset Manager with a B Corp Certificate in the Nordics

The idea behind the foundation of Helsinki Capital Partners (HCP) in 2007 was clear: a desire to be an open and honest asset manager. From the beginning, we have been committed to complete transparency in our operations. It is a self-evident fact for us that customers are told how much they pay both directly and indirectly to the company for our service.

In the year 2017, Helsinki Capital Partners’ persistent work was acknowledged with a considerable international recognition. HCP was awarded B Corporation Certification, which is one of the most demanding sustainability certifications in the world.

”The B Corp Certification offers us concrete tools to systematically assess our sustainability performance and make our performance public. The certification separates the authentic mission-based companies from the green and whitewashing masses,” summarizes Tommi Kemppainen, the CEO of Helsinki Capital Partners.

Tommi Kemppainen at the B Corp Summer Summit in Cascais in May 2017.

B Corporation network has provided us with plenty of chances to get to know like-minded companies and individuals. Inspired by the B Corp Summit in Cascais, HCP organized Best for the World Summit in Finland to bring together people and companies, who want to use business as a force for good.

Making a Difference in the Financial Industry

The financial sector is known for issues such as encouraging short-term thinking, irresponsible processes, and hierarchical management structures. In addition, products and services are often very complex and carry hidden costs. For this reason, it is often challenging for the customer to understand their own investment needs and the features of the available investment products, especially their pricing.

HCP is a forerunner in bringing responsibility to the financial sector. Our ambition is to take part in building a more trustworthy, transparent, and ethically sound financial industry. All our operations are guided by our value proposition: Asset management to be proud of.™ We always focus on the best interest of our customers, which is also why we have eliminated all incentives, such as staff bonuses and hidden fees, from our operations. We want to take part in building a healthier and better financial sector and a better society in general. This is not an easy task in an industry that has been caught for countless misconducts, but we are taking on the challenge.

More Culture for the Society

As a company, we are a part of society in many ways. We do not limit our role in society to only providing financial services and paying taxes. In other words, we take the freedom to make our interaction with other members of society into something that creates as much value as possible. In order to keep our minds fresh, we strive to be an active member of society, working alongside as many other entrepreneurs and professionals as possible, on projects that are in line with our values.

Last year, we mainly took part in music events, supported artists, and promoted athletes. What characterizes all these projects is the collaborative aspect: making something great together. We do not simply donate money, but we participate in all projects from the beginning to the end by offering our resources, network, and expertise. The indirect and direct spending causes money to circulate in society in many more ways than is the case with sponsoring or donating. In 2017, we used approximately 61,000 euros on cultural collaboration, and 16,000 euros on microfinancing entrepreneurs.

The #HCPSPIRIT label serves as a tool for sharing, branding, and communicating cultural projects that we are involved in. The hashtag was created as a label to represent all the work that we do that is not directly linked to asset management. The #HCPSPIRIT label is used on different social media channels and printed media during events, and it’s becoming increasingly recognized. We encourage our stakeholders to share both good and bad experiences publicly using this hashtag on social media. This way we receive real-time feedback from our stakeholders.

”HCP has not yet innovated an investment vehicle that invests into culture and music but HCP has been using about 10% of its revenue in Cultural Productions such as music events. This way investors can benefit not only from the investments into HCP’s products but also make a positive impact by supporting cultural productions in Helsinki and abroad,” says Elias Koski from HCP Artists.

Care to know more? Book a virtual meeting with one of our experts or drop by at our office in the Cable Factory at any time.

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Investing in a few superstar companies provides the highest returns

HCP Focus fund is among the top 15 best-performing globally investing equity funds. It has reached a stupendous 152% 5-year performance with a very highly concentrated portfolio.¹ Now the Fund Manager Ernst Grönblom discloses all the stocks in the fund and reveals his next picks.

Currently, HCP Focus holds only 12 positions. Eleven of those are technology giants such as PayPal and Facebook, that have become dominant players in their sector. The Fund Manager Ernst Grönblom has successfully proven that most of the shareholder value comes just from a handful of stocks.

”The market systematically underestimates and misunderstands the power of the winner-take-all phenomenon,” Grönblom says.

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Grönblom seeks for companies that have a long-term potential to displace their competitors. Target companies benefit from megatrends such as globalization and network effects.

”A good example of network effects is the online marketplace Mercadolibre, which I have had in the portfolio since the beginning. In its own sector, the company has become the largest and most profitable company in Latin America, largely because of network effects. As a long-term investment, it has also been one of the best-performing stocks in the world, with an average annual growth rate of over 30% for more than ten years. Now Alibaba grows and conquers the Chinese online market in the very same way,” says Grönblom.

HCP Focus fund currently holds only 12 stocks. Most of them have posted significant gains in the past 2 years.

HCP Focus fund currently holds only 12 stocks. Most of them have posted significant gains in the past 2 years.

Focus’ investment strategy is extremely concentrated and the investment horizon is long. Grönblom only buys companies that he expects to hold in the portfolio for more than 10 years. Grönblom tries to identify superstar companies early on. For example, he bought Amazon’s stocks already in the early days of his strategy.

”I have owned Amazon’s shares almost since the beginning of the strategy, that is, more than ten years ago. However, as the market situation changes, I may change a significant part of the portfolio’s content. The last major year of change was 2017 when I replaced as many as five companies in the portfolio.”

Although most of the shares in the portfolio are digital platform giants, HCP Focus strategy is not restricted to one industry. Currently, the best performing stock in the portfolio is FeverTree, that is, a company producing premium mixer drinks.

So, what is Grönblom going to buy next? The fund manager is considering investing in another three digital platform companies: EtsyZillow Group, and GrubHub. Grönblom is also looking into buying some shares of Nvidia Corp, that is, a company famous for computer graphics drivers.

Read more on on the portfolio’s Fund Presentation or Focus Homepage.

Portfolio Manager Ernst Grönblom

¹ Hoikkala & Liman: ”One of the World’s Top 15 Fund Managers Reveals His Next Picks”, Bloomberg, Oct 16th, 2018.

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#HCPSPIRIT at Superwood Festival

Superwood is a festival on Nordic oddity, pure beauty, and woodland vibes. The festival is curated by Ivana Helsinki, that is, a Finnish independent fashion, art, and film label. This year the festival was organized on 12th till 14th of October.

The festival has been called ”an urban weekend at the summer house in the spirit of Twin Peaks” by its founder Paola Suhonen. You couldn’t put it much better. Some quirky installations and curious performances around architecturally exceptional Hotel Rantapuisto really bring out a unique dreamlike atmosphere.

During the festival weekend, we were blessed with beautiful autumn colors and warm but foggy nights, that made the festival an unforgettable experience.

We at HCP were happy to take part in Superwood by producing the Campfire Unplugged music performance at the festival beach front.

Campfire Unplugged with #HCPSPIRIT

Musicians Anthony DawoudFelix Lybeck, Henri-Aleksi, and Julia Delgado played intimate versions of each other’s songs as well as some cover versions of campfire classics. The shamanistic atmosphere was completed by surrounding art installations made by Luca Delgado and lights by Jyri Sucksdorff.

We’d like to thank all the festival guests & organizers, Paola & Pirjo Suhonen from Ivana Helsinki, and our own great artists for a magical weekend.

Anthony Dawoud, Henri-Aleksi, Julia Delgado & Felix Lybeck

#HCPSPIRIT at Lift Helsinki Festival

We are proud to announce that we will be participating in Lift –  the Festival on New Dimensions of Media, Arts & Culture. Lift is organized on 17th and 18th of October at the Cabble Factory (Kaapelitehdas), Helsinki.

HCP will present a panel discussion on the Live stage on Thursday 18th of Oct at 12:30 pm.

The #HCPSPIRIT – Connecting Business, Arts, and Creative Tribes

Business and Arts form an alliance that many may have called unholy. Although, in order to flourish they need one another in the contemporary, hyperconnected world. Dr. Sam Inkinen, Artist Sini Kunnas and Elias Koski from HCP Artists will discuss the futures of arts and the mutual dependence and interaction of all creative tribes.

Dr. Sam Inkinen, Sini Kunnas, and Elias Koski

Dr. Sam Inkinen is a media scholar, futures researcher, philosopher, writer, and innovation specialist who is known for his studies on creativity and innovation dynamics. Inkinen is a visionary speaker who has an aspiration to link philosophical ideas and academic theories to life and practice.

Sini Kunnas is celebrating her 20th year as a professional artist this year. She is known for combining traditional painting practices to digital and conceptual art. Her mission as an artist is to step outside of galleries in order to reach true interaction with people. Kunnas also lectures on intuition, art, and vision.

Elias Koski runs the artist partner group at HCP Asset Management. Working alongside numerous artists he has co-produced a number of art exhibitions and festivals and supported some up and coming talents in building a sound professional career in arts.

Manhattan Street Art Poster Project (2015) by Sini Kunnas studied the reactions of people who run into traditional portrait art on the streets of New York. The project was produced with #HCPSPIRIT.


Helsinki Capital Partners Honored as Best for Workers

Helsinki Capital Partners Honored as Best for Workers, Creating Most Positive Impact for Employees Evaluated by Comprehensive B Impact Assessment

Last week, Helsinki Capital Partners (HCP) was recognized for creating the most positive impact for their workers based on an independent, comprehensive assessment administered by the nonprofit B Lab. Honorees are featured on B the Change publication at

HCP works as a stepping stone into career life for many young professionals through paid internship programs. Heini Kangas-Heiska taking care of HCP's rooftop garden during her internship in 2017.

HCP works as a stepping stone into career life for many young professionals through paid internship programs. Heini Kangas-Heiska taking care of HCP’s rooftop garden during her internship in 2017.

HCP is honored in the Best for Workers list, which includes businesses that earned a Workers score in the top 10 percent of more than 2,400 Certified B Corporations on the B Impact Assessment. The Workers section of the B Impact Assessment assesses the company’s relationship with its workforce. It measures how the company treats its workers through compensation, benefits, training and ownership opportunities provided to workers.

The category also focuses on the overall work environment within the company by assessing management/worker communication, job flexibility, corporate culture, and worker health and safety practices.

Helsinki Capital Partners made the list thanks to exceptional practices like ownership opportunities, having all permanent workforce as owners, very flat compensation structure in salaries, no restrictions on location where work is conducted and great freedom to participate in #HCPSPIRIT projects.

Juhani Halminen joined the HCP team in the final year of his studies by participating in HCP’s trainee programme. Now he's one of the owners of the company and working as a Head of Fund Administration.

Juhani Halminen joined the HCP team in the final year of his studies by participating in HCP’s trainee programme. Now he’s one of the owners of the company and working as a Head of Fund Administration.

“With the rise of anger at a system that feels rigged, people are hungry for companies like Helsinki Capital Partners, who are changing the system by building businesses that seek to create the greatest positive impact,” says Jay Coen Gilbert, co-founder of B Lab.

Best for The World is the only list of businesses that uses comprehensive, comparable, third-party-validated data about a company’s social and environmental performance. As consumers, talent and investors increasingly demand transparent, values-aligned businesses to buy from, work at, and invest in, companies will need to not just be the best in the world but the best for the world.

Today there are more than 2,400 Certified B Corporations across more than 150 industries and 50 countries, unified by one common goal: to redefine success in business.

B Lab is a nonprofit organization that serves a global movement of people using business as a force for good.  Its vision is that one day all companies compete not only to be the best in the world, but the best for the world and society will enjoy prosperity for all for the long term.

For more information:

Why is HCP Black Portfolio Strategy Defensive? 

On the video below, the HCP Black Portfolio Manager Tommi Kemppainen discusses the performance of the fund and explains why it is important to be defensive in the current market situation.

It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight!
– Jesse Livermore

Why are we a B Corporation?

Helsinki Capital Partners (HCP) achieved a B Corp Certification in May last year. B Corporations meet rigorous standards of social and environmental performance and expand their corporate responsibilities to include consideration of stakeholder interests.

During the international #BCorpMonth of February it’s time to look back at why we decided to apply for the certification and what have we learned as a member of the global movement of 2200+ B Corps.

Why B ?

Why B ?

”The B Corp Certification offers us concrete tools to systematically assess our sustainability performance and make our performance public. The certification separates the authentic mission-based companies from the green and whitewashing masses”, summarizes Tommi Kemppainen, the CEO of Helsinki Capital Partners.

Tommi Kemppainen at the B Corp Summer Summit in Cascais in May 2017.

HCP was found ten years ago based on the value proposition Asset management to be proud of.™. Our mission for the next ten years is not only to make profitable, honest and transparent asset management but also to be best for the world.

Why B?

Photo: Aleksi Poutanan | Forbes Suomi

“As a B Corp, we have more resources than before to continue redefining the financial sector and the business world”

B Corporation network has provided us plenty of chances to get to know like-minded companies and individuals. Inspired by the B Corp Summit in Cascais, HCP organized Best for the World Summit in Finland to bring together people and companies, who want to use business as a force for good.

The warm reception of the summit proved that there’s a need for a low-threshold forum. Since last October HCP has hosted #HCPSPIRIT x #BCorp Workshops, where mission-based businesses such as Tarvas Footwear, Samuji, Kolme Kaverin Jäätelö, and Pave Arkkitehdit have exchanged ideas on corporate responsibility.

HCP will attend to the next B Corp community meeting in Copenhagen and the Summer Summit in Amsterdam. The next #HCPSPIRIT x #BCorp Workshop is scheduled for April and the next Best for the World Summit for later in Autumn.


Responsibility as a Competitive Advantage of the Nordic Financial Sector?

If we think about the ideal environment for the asset management business, places like New York and Switzerland are among the first locations that come to our minds. What if in the future people would turn their eyes to the Nordic Countries as well?

The financial sector is all about trust. Today, when the trust in financial business has globally eroded, Finland and the other Nordic Countries are emerging in a new way from an investment point of view. The Nordic countries have a global advantage in their honest reputation. This view is supported, for example, by the recent Nordic Council publication Trust – The Nordic Gold, as well as the statistics of our own country.

Tommi Kemppainen

Tommi Kemppainen (Photo: Aleksi Poutanen | Forbes Suomi)

Instead of technological innovations, taking all the stakeholders into account, in all financial organization’s operations, can be the next financial innovation that provides us with a competitive advantage. For societies, such an approach has tremendous significance and it has the power to revolutionize the world. For HCP, this is done by holding on to the value proposition Asset Management to Be Proud of™.

We started ten years ago modestly, but with clear principles. We wanted to make profitable asset management openly and honestly. We have taken steps to be a constructive actor in society, not just a pioneer in transparency. Already now, we do our best to take all the stakeholders interests into account, and not just the interests of our shareholders and creditors.

In May, HCP was the first Finnish company to receive the international B Corp certificate. B Corp companies are not only driving to be the best businesses in the world, but they also want to be the best for the world. The next Best for the World Summit will be held in Finland later this year.