HedgeNordic

For the first time, the Nordic Hedge Award will introduce a new category: Long-Only Equity Hedge Funds (ELO). This category aims to recognize strategies that, despite their long-only approach, exhibit key hedge fund-like characteristics. The addition of ELO reflects the evolving hedge fund landscape and responds to growing interest from investors and industry professionals who appreciate the value these funds bring. KvinnoKapital will be presenting the winners of the ELO category. This collaboration highlights a shared commitment to promoting excellence and diversity within the financial industry. Congratulations to the five nominees, Asilo Asset Management Oy, Borea Asset Management AS, Captor Fund Management AB, Helsinki Capital Partners, and Stolt Kapitalforvaltning!

Frontier markets have faced significant challenges in recent years, particularly from mid-2022 onward, as aggressive rate hikes by central banks – especially the Federal Reserve – triggered capital outflows, currency devaluations, and rising debt costs. Inflation, geopolitical instability, and governance issues further eroded investor confidence and growth prospects. Mattias Martinsson, Chief Investment Officer at frontier markets specialist Tundra Fonder AB, describes this period as “the worst crisis since the Asian Financial Crisis of 1997-98 if you look at the average currency depreciation.” However, he likens the current environment to the early 2000s post-crisis period, suggesting that the recovery is still in its early stages, with a long path ahead. Looking back at history, Martinsson believes that frontier markets may be in a similar position to the early 2000s after the Asian Financial Crisis. “If we examine how these markets performed after the crisis, the following decade was actually very strong,” he notes. However, he cautiously adds that past performance is no guarantee of future returns, though history often rhymes. “I’m not saying this is the perfect time for frontier markets to take off, but the similarities with previous post-crisis environments are striking.”

The United States has long been home to trend-following CTA ETFs, offering investors quick, liquid exposure to one of the most effective diversifiers in risk-off environments. In contrast, Europe has been without CTA ETFs in UCITS format – until now. The world’s largest trend-following ETF, the iMGP DBi Managed Futures Strategy ETF, now has a UCITS-format sibling listed on the Euronext exchange in Paris, soon to be available on the London Stock Exchange as well. Andrew Beer and his team at DBi, part of the iM Global Partner asset management network, have officially launched Europe’s only Managed Futures UCITS ETF. Beer believes that the trend-following managed futures strategy is the most effective diversifier for a portfolio of stocks and bonds. Now, their replication strategy – previously available through both a U.S.-listed ETF and a Europe-domiciled UCITS fund – can be accessed by all types of investors in the UCITS ETF wrapper. “We’re not in the business of launching different strategies like throwing spaghetti at the wall to see what sticks,” Andrew Beer tells HedgeNordic. “We have a proven strategy that replicates trend-following approaches. Our goal is simply to deliver it in a different format, making it accessible to all investors.”

Passive strategies have reached nearly every segment of financial markets, including the more remote corners of emerging market (EM) local currency debt. While passive strategies offer broad exposure to these markets, they often fail to navigate the complexities and idiosyncratic risks unique to each country, including economic conditions, fiscal policies, political factors, liquidity dynamics, and more. These idiosyncratic risks make active management a more effective approach in this space, especially in risk-off environments. “In today’s volatile world – driven by both local factors and geopolitics – active management is the best way to gain exposure to EM countries,” asserts Mikko Kuisma, Portfolio Manager within Aktia’s Emerging Markets Debt team. “Our goal is to avoid the potholes and geopolitical hot spots in our portfolio because in our experience, taking these risks is rarely rewarded, especially in the bond market.” The importance of active management became especially clear in risk-off environments such as 2022. “That year is a prime example of how idiosyncratic factors can drive market returns,” notes Kaj Paulamäki. “This is a better environment for us because country selection plays a much bigger role, compared to a globally strong bull market where everything rallies,” he elaborates. “In such conditions, active managers can generate significant alpha.”

February of this year marked one of the best months in the nearly 12-year history of stock-picking hedge fund Symmetry Invest with an advance of 10.8 percent. While the fund has posted double-digit returns on multiple occasions, this time the performance stood out because, as founder and portfolio manager Andreas Aaen puts it, “the portfolio did everything it was designed to do.” Aaen highlights four key aspects of the fund’s February performance. “First, we made money on both long and short positions simultaneously.” He further emphasizes that the fund provided real risk diversification for investors, noting that the Nasdaq, for instance, fell four percent during the month. Importantly, he stresses that the returns were achieved “the right way” – by investing in undervalued value stocks. Lastly, he points out that the gains were broad-based, stating, “Our return was not driven by a single winner, but a wide range of positions.”

Late last year, Tidan Capital introduced Nova, a market-neutral options and volatility arbitrage strategy designed to exploit anomalies in equity options markets. These inefficiencies often emerge and become more pronounced during periods of market turbulence, positioning Nova to perform well in risk-off environments. Building on this foundation, Tidan Capital is now launching Tidan Global Equity Enhanced, a fund that employs a portable alpha strategy, leveraging Nova’s alpha generation while maintaining equity market exposure through low-cost futures. The strategy aims to capture the long-term growth potential of global equities while generating uncorrelated alpha to both enhance returns and mitigate downside risk. “Investors have been interested in portable alpha strategies for decades, and they are once again a priority in today’s market environment. We are seeing growing demand for these products, including from our own investors,” says Serge Houles, CFA, CEO of Tidan Capital. “Our investors tell us, ‘We still want equity exposure, but we don’t like the risk right now,’” says Houles. “Combining long-only equity with Nova, which is equity-related, is a match made in heaven,” he emphasizes. Since Nova is quite defensive and tends to perform exceptionally well during market dislocations, layering beta on top creates “a perfect fit,” according to Houles.

Stock-picking boutique Protean Funds Scandinavia AB is set to officially challenge passive investing with the launch of its third fund, Protean Aktiesparfond Norden, on April 1. With Richard Bråse as lead Portfolio Manager, the fund aims to combine the cost-efficiency of index funds with the outperformance potential of active management. Investors benefit from a competitive annual fee of 0.5 percent for direct investments (0.75 percent via platforms like Nordnet and Avanza), with the possibility of further fee reductions as assets under management grow. “With a significantly lower fee, Aktiesparfonden will have an unfair advantage to typical actively managed funds when it comes to generating long-term returns,” argues Pontus Dackmo, CEO and Investment Manager at Protean Funds.

After founding his own macro research firm, former Nordea Chief Strategist Andreas Steno Larsen has joined forces with fixed-income specialist Asgard Asset Management to launch a new macro hedge fund. The newly established Asgard-Steno Global Macro Fund blends Steno’s macro nowcasting techniques – designed to capture real-time shifts in the macro environment – and Asgard’s time-tested risk premia strategy. “We’ve combined our strengths, I see this as a joint venture where we integrate the best aspects of our macro strategy with the strongest elements of Asgard’s risk premia approach,” says Steno. Steno co-manages the macro strategy alongside Chief Portfolio Manager Claus Venderby Hornsleth and Chief Technology Officer Alex Mealor, while the Asgard team oversees the risk premia strategy in interest rate markets. At the heart of the fund’s macro strategy is nowcasting – a process that uses high-frequency, real-time data to forecast current or imminent economic conditions. Steno Research’s nowcasting model is anchored in three primary pillars: inflation, growth, and liquidity.

As is tradition, Nordic hedge funds once again secured a strong presence among the nominees at the EuroHedge Awards and, as usual, some returned home with top honors. At this year’s ceremony in London on February 27, Tidan Fund, Ridge Capital Northern Yield, and Svelland Global Trading Fund claimed victory in their respective categories. Congratulations to Tidan Capital, Ridge Capital, and Svelland Capital!

Systematic investing has become a widely embraced approach in equities and other liquid asset classes, yet its adoption in fixed income – particularly in emerging market bonds – remains relatively limited. While discretionary strategies continue to dominate, Andra AP-fonden (AP2) is challenging that norm. Under the leadership of Kristian Hartelius, the quantitative team at AP2 has since 2015 extended its systematic investment approach to emerging market fixed-income bonds, building on its success in applying quantitative strategies to developed and emerging market equities. The foundation of AP2’s systematic fixed-income strategy lies in developing robust macro models for both hard currency and local currency government bonds in emerging markets. Although both instruments are government bonds, they differ significantly in structure. However, the general approach is quite similar for both hard and local currency emerging market bonds. “You collect macroeconomic data and build models to estimate spread returns for hard currency bonds and duration returns for local currency bonds,” explains Hartelius. Ultimately, “it’s essentially about using statistical models to forecast returns, whether it’s for equities, bonds, hard or local currency bonds. The models may differ, and you’ll rely on different data, but the fundamental approach remains consistent.”