HedgeNordic

A former billion-dollar hedge fund from the Nordics is reaching its final chapter amid “diminished demand for hedge funds with a low-risk focus” in Sweden. Case Hedgefond, a multi-strategy hedge fund managing just over €100 million as of mid-year, is set to merge into Case Kapitalförvaltning’s credit hedge fund, Case Credit Opportunity. “In connection with a review and consolidation of our fund offering, the board has decided to merge Case Hedgefond with Case Credit Opportunity,” announces the team at Case Fonder. CEO Johan Andrassy explains that “in the current financial landscape, Sweden is experiencing a diminished demand for hedge funds with a low-risk focus.” Andrassy sees this shift as “a strategic opportunity to consolidate resources and enhance the value proposition for investors by merging a hedge fund predominantly invested in fixed-income securities with a credit hedge fund that has a complementary focus.”

A coalition of institutional investors, led by the Teacher Retirement System of Texas, is gaining more support, including from Nordic investors, in their demand for hedge funds to implement cash hurdles in incentive fees. Swedish pension insurer PRI Pensionsgaranti and Finnish pension insurance company Ilmarinen are among the new signatories to an open letter titled “Regarding the Usage of Cash Hurdles in Incentive Fee Arrangements,” which calls for cash hurdles before hedge funds can charge incentive fees. One of the first Nordic hedge fund investors to actively advocate for implementing cash-based hurdle rates was Norwegian wealth manager Formue, one of the largest hedge fund allocators out of the Nordics. Cian Walsh, Head of Hedge Funds at Formue, argued that the absence of cash hurdles leads to costly investing and disincentivizes managers from taking risks. “With no cash hurdle, what’s the incentive for the manager to take much risk when collecting performance fees on risk-free returns of 500 basis points?” Walsh pondered. “There is no incentive.”

With its unconventional high-yield bond strategy now exceeding €100 million in assets under management, Ridge Capital is expanding its portfolio management team with the addition of Constantijn H. as a portfolio analyst. Formerly a shorting specialist at an equity market-neutral hedge fund under Nordea Asset Management, Huigen joins Ridge Capital from Brummer & Partners, where he was part of the team managing a tech-focused strategy for Brummer Multi-Strategy. “We are excited to announce that we have now completed the recruitment of a new portfolio analyst with an impressive CV and market expertise,” announces Måns Levin, the CEO and Founding Partner of Ridge Capital. “He will join us after the summer to strengthen the investment management team,” adds Levin, who co-founded the high-yield bond manager in 2022 alongside Christoffer Malmström, CIO and lead portfolio manager of the Northern Yield fund. “We’re thrilled to have Constantijn join the portfolio management team,” Christoffer Malmström comments on Huigen joining the team. “His experience and skills will enhance our strategy and drive value for our investors.” Huigen will join the current four-member team comprising founders Levin and Malmström, alongside Ridge Capital’s Head of Business Development David-Anthony Carenco, and junior analyst Carl Windmar.

There is a Danish saying that goes, “7 years, Niller, then you know a thing or two,” suggesting that seven years of experience amounts to a wealth of expertise. It’s a fitting expression for Danish fixed-income boutique CABA Capital, which is celebrating the seventh anniversary of its first hedge fund, CABA Hedge. “Seven years later, you do know a thing or two,” jokes Mette Østerbye Vejen, co-founder and CEO of CABA Capital. “Seven years ago, we launched our first fixed-income hedge fund, CABA Hedge KL, together with Nykredit Portfolio Administration. We were three colleagues and we sat in a small room on Gl Køge Landevej,” recalls Østerbye. “We were full of anticipation and had a go-getter attitude. Seven years later, we know a thing or two – it was fortunate we didn’t fully know what we were getting into at the time,” she adds. Seven years later, the Danish boutique operates with a team of six from a different office, offering a product range that includes three investment vehicles.

In late 2021, Michael Falken and his team at Tidan Capital launched a hedge fund employing a capital structure relative value strategy, following a similar approach used at Brummer-backed Carve. After two years of underwhelming performance, Tidan Fund is enjoying a strong resurgence in 2023 as value transfer cases continue to materialize. The positive trend in equity markets continued in June, defying expectations given the myriad of concerns facing market participants. “If someone had asked me to guess the financial market performance of June – having known the French election malaise surprise, Biden’s debate performance (or maybe lack of debate better describes it), escalation in the Russia-Ukraine war (with US weapons hitting Russian targets), huge Labour victory in the UK, China slowdown – I would have been wrong by a wide margin,” acknowledges Michael Falken, the founder and CIO of Tidan Capital. Tidan Fund has advanced 10.9 percent year-to-date through mid-year, including a 3.0 percent gain in June alone. The fund is up an additional 2.5 percent month-to-date. After declining 9.1 percent in 2022 and 3.1 percent in 2023, Tidan Fund’s year-to-date advance of almost 14 percent has brought the fund’s inception-to-date cumulative return in touching distance of positive territory.

Stock-picking hedge fund Symmetry Invest has achieved a net-of-fees annualized return of 18 percent since its inception just over 11 years ago. Founder and portfolio manager Andreas Aaen attributes some of this success to the fund’s ability to short, saying “One thing is certain – Symmetry would never have achieved a historical return of 22 percent gross and 18 percent net over 11 years without the ability to short.” While some prominent short sellers exited the scene due to challenges from the low interest rate environment and meme stock activity, why does Aaen see value in short selling despite risks being asymmetrically skewed against him? “Our long portfolio typically consists of defensive value stocks in the small-cap segment, where it is difficult to expect returns in excess of 20 percent annually,” explains Aaen. “Returns at that level are usually only achieved through extremely high risk, leverage, or similar, but at Symmetry, we have used shorts to achieve these returns with lower market risk than with a traditional portfolio,” he emphasizes.

Despite June marking the end of a long streak of consecutive positive months, the Nordic hedge fund industry still achieved its best half-year performance ever. The Nordic Hedge Index edged down 0.3 percent in June, with equity hedge funds and CTAs dragging down performance. Nevertheless, the industry ended the first half of the year with a gain of 7.5 percent, marking the best half-year performance since the first half of 2009, when the industry advanced 6.7 percent on average.

Following the acquisition of a majority stake by Frendegruppen – a consortium of Norwegian independent banks, Borea Asset Management AS is strengthening its investment team with the addition of two portfolio managers. The fixed-income-focused boutique welcomes Jon Hille-Walle and Audhild Aabø as equity portfolio managers, as part of plans to expand its fund offerings for the banks’ retail and corporate customers. “Borea Asset Management is growing strongly, and we are experiencing increased demand for a wider range of mutual funds. Therefore, we are very happy to be able to announce that we are now further strengthening the team with two experienced equity managers,” announces the team at Borea Asset Management. “With the appointment of Jon and Audhild, we look forward to offering more funds to our customers in the future.”

Laura Wickström, CAIA has been appointed as the permanent Chief Investment Officer of Veritas Pension Insurance Company, following her interim tenure in the role after the departure of Kari Vatanen to rival pension insurance company Elo. Wickström officially assumes her new position on July 1. “Laura possesses exactly the experience and market understanding that this demanding task requires,” says Carl Haglund, the CEO of Veritas. Wickström has been with Veritas for about six and a half years, following an extensive career at Finnish alternative investment manager and fund-of-hedge fund manager AIM Capital, where she also served as Chief Executive Officer. Prior to her permanent appointment as CIO at Veritas, Wickström served as Deputy CIO and Portfolio Manager responsible for Private Equity and other illiquid fund investments.

Nordea Asset Management is celebrating the five-year anniversary of its European-focused relative value fixed-income hedge fund, Nordea European Rates Opportunity Fund, this June. A standout performer in the Nordic fixed-income hedge fund space in 2022 with a return exceeding 10 percent, Nordea European Rates Opportunity Fund has delivered an annualized return of 7.5 percent over its five-year journey. Managed by Nordea Asset Management’s Fixed Income Rates Team, Nordea European Rates Opportunity Fund seeks to capture alpha from relative value opportunities within the universe of European covered bonds rather than relying on directional positions. Despite covered bonds being perceived as a safe asset class, there are ample alpha opportunities in this highly liquid yet underinvested and inefficient market, according to Henrik Stille, Lead Portfolio Manager of NAM’s European Rates Opportunity Fund and NAM’s European Covered Bond strategies. “At Nordea Asset Management, we’ve shaped an innovative strategy to generate absolute returns with a unique stance: staying at the highest level of the credit ladder with an active, high-conviction and leveraged approach,” says Henrik Stille, part of Nordea Asset Management’s Fixed Income Rates team overseeing €40 billion in assets under management as of the end of 2023. “Exploring attractive spread opportunities is our key expertise and has been the essential driver of alpha for many years.”