from Sunday Times
by Alexandra Goss
Fame and fortune. Stefan Edberg talks to Alexandra Goss. The former world No1 is applying his winning attitude to fund management.
STEFAN EDBERG is a former world number one tennis player who has now set out to dominate the fund management industry. In a professional tennis career spanning 13 years, Edberg, who is Swedish, won six Grand Slam singles titles and three Grand Slam men’s doubles titles.
Apart from John McEnroe, he is the only player to have been ranked number one in both singles and doubles. By the time he retired from the professional circuit in 1996, Edberg, 45, had netted himself more than $20m (£12m) in prize money. A desire to take control of his winnings led him to set up Case Asset Management in Stockholm in 2004, along with former hedge fund managers Bo Pettersson and Fredrik Svensson.
The company launched its Safe Play fund in January, which invests in Nordic corporate bonds, an area in which it became heavily involved during the financial crisis. Edberg lives in Vaxjo, southern Sweden, with wife Annette, 45, and their children Emilie, 17, and Christopher, 14.
How much money do you havein your wallet?
I normally have about 1,000 kronor — the equivalent of £100. I pay for most things by credit card.
What credit cards do you use?
I have a Platinum Mastercard, which offers insurance and a concierge service, and a Visa.
Are you a saver or a spender?
I was definitely brought up to be a saver and to treat money with respect. At the moment, I have a mixture of assets — I’m probably more diversified than most people. For example, I live on a country property with forest and farmland and have invested in property nearby, too. I’m also in cash, bonds and equities.
Why did you launch the Safe Play fund?
The financial crisis created a lot of opportunities. Towards the end of 2008, we saw some great upside potential in the corporate bonds issued by Swedish banks such as SEB. Some of the Swedish banks were in bad shape but we took the stance that the government wouldn’t let them go bankrupt as it had saved them during the crisis of the 1990s. I invested a lot of money in them through Fair Play, which we launched six years ago. It has a mixture of equities and debt, but is heavily exposed to bonds issued by Nordic companies, avoiding southern Europe. Fair Play returned 27% in 2009 and 10% last year, which is great considering it targets a return of 6%-8% a year. I think the Nordic region will be one of the most secure places to have your money because I don’t believe the banks will go under. We have since launched another fund, called Safe Play, which invests only in Nordic corporate bonds, particularly from banks such as SEB, DnB NOR in Norway and a small proportion in Danske Bank in Denmark. It aims to achieve a return of between 5% and 7% a year, with low risk. We have had a lot of interest from private and institutional investors.
Which shares do you invest in?
At the moment, it is probably safer to buy into quality American companies than to buy US treasuries [government bonds]. I’m buying Coca-Cola and Microsoft, which can profit from the weak dollar and have the potential to grow in Asia. I also think there are some good opportunities in the telecoms sector, which is paying good dividends but has lagged the market. I’m buying in through an exchange traded fund (ETF), which gives exposure to Vodafone (yielding 4.7%), France Telecom (8.9%) and Telefonica (7.2%) and also helps to keep down costs. [ETFs are low-cost funds that track the performance of an index but can be traded on the stock exchange like shares.]
Commodities and industrials have had a fast run recently so people might start taking profits there and moving into sectors such as telecoms. Tell me more about your property investments. I live on a country property, which I bought in the 1990s. Farmland prices have gone up tremendously in south Sweden and while mine is a family home that I’m not looking to sell, I think it will be a good investment. I have been buying rental properties in Vaxjo since I started Case in 2004. They are mostly residential but there are also some commercial office spaces. During the crisis, I bought mostly in cash but I took out a big loan on the last property I bought in 2009 because the interest rate levied was only about 1%. It’s close to 3% now and I will pay off the loan once the rate gets too high. I’m getting rental yields of about 6%. We are not talking Stockholm or London rents, but Vaxjo is a growing city.
How did you get into finance?
It was a matter of taking control of my own life, of the money I made throughout my career and trying to manage it in the best way possible. Before I retired, I was dependent on a lot of people but now I manage most things myself.
How much did you earn last year?
I don’t know exactly, but it was a very good time to be part of the Swedish market. It was one of the better performers in the world last year [the OMX Nordic Exchange rose 34% last year, compared with 9% for the FTSE 100]. I also get dividends from Case, which had its best ever year in 2010.
Have you ever been really hard up?
When I first started playing on tour as a junior I pretty much had nothing. I had to win tournaments to pay my expenses. Things picked up pretty quickly when I left school at 17 to turn professional.
What was your first job?
Playing tennis — apart from what I do now, that has been my only job.
What has been your most lucrative work?
Playing tennis, but hopefully that will change if Case progresses. If you make it to the top in tennis, sponsorship earnings come hand-in-hand with prize money. For four or five years, I was doing very well, matching prize money with sponsorship earnings.
Are you better off than your parents?
Definitely. My father was a policeman and my mum worked in an office but spent a lot of time at home.
What is better — property or pension?
It depends. If you bought property at the right time and in the right location, that has probably been the best so far, but you never know what is going to happen. The key is diversification. I have a pension that I set up during my playing years, but the performance of pensions depends on who manages the money.
What has been your best investment?
My wife and kids. Apart from that, it would be setting up Case.
What about worst?
I made a few bad calls during the tech boom of 2000. I invested in a company called Global Crossing and in a local Swedish tech firm. I didn’t lose a huge amount, though. Everyone was caught up in tech mania at the time. It was crazy.
What is the most extravagant thing you have ever bought?
During my tennis career I bought a holiday home in Mougins, in the south of France. In 1990 it was quite expensive. I sold it in 2000 and made a small loss — if I’d kept it another five years it would have been a totally different story.
What aspect of the tax system would you change?
They have taken away inheritance tax and wealth tax in Sweden, but it has one of the highest income tax rates in the world [the top rate is 57% on earnings over 561,000 kronor (£55,000)]. Yet the infrastructure, such as schools and healthcare, is very good and people seem to accept that they have to pay a lot of tax to get the benefits. If I were to change anything, it would be to have a flat tax rate for individuals and companies, [the top rate of corporation tax is 26.3%] which would make things simpler and stop a lot of avoidance schemes.
What is the most important lesson you have learnt about money?
The key is to treat it with respect and make sure you have the right people around you.
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