Stockholm (HedgeNordic) – The number of active Nordic funds of hedge funds declined precipitously from 31 at the beginning of 2015 to only ten funds, as closures (24) outpaced new launches (3) by a wide margin. This trend, however, has not made the competition for the “Best Nordic Fund of Hedge Funds” award less intense. On the contrary, the survival of the fittest makes the competition even more fierce.
Most of the up-and-running funds of hedge funds in the Nordics have demonstrated an ability to deliver stable and consistent absolute returns. Merrant Alpha Select, the global market-neutral fund of hedge funds founded by Ulf Sedig and Rolf Hagekrans, dominated this award category, winning at five of the seven previous editions of the Nordic Hedge Award. With Merrant Alpha Select now closed, the time has come for other funds of hedge funds to take the lead.
Winner: Atlant Multi-Strategy
The “Best Nordic Fund of Hedge Funds” of 2019 is Atlant Multi-Strategy, a fund of funds mainly investing in Atlant Fonder’s own hedge funds. The Atlant-branded suite includes three-market-neutral funds, two equity-tilted hedge funds designed to provide exposure to equity markets at lower volatility and one vehicle designed specifically to protect against market crashes. The Swedish asset manager’s top-down assessment of the market environment determines the allocation to each fund at any given time.
“Being among the top three nominees is already proof that we have succeeded in our management of the fund,” Michael Ekelund, Atlant Fonder’s CEO, tells HedgeNordic. Atlant Multi-Strategy enjoyed four consecutive years of positive returns, gaining 3.2 percent in 2019 and 1.8 percent in 2018. According to Anders Kullberg, lead portfolio manager at Atlant Fonder, 2019 “was essentially another relatively successful Atlant-year.” In a comment on the distinction, Ekelund says that “an award from HedgeNordic in tough competition with many good Nordic managers is something we are very proud of.” Ekelund adds that “the team with Anders Kullberg in the lead since the fund’s launch in January 2016 has delivered a good risk-adjusted return.”
One highlight of Atlant Fonder’s 2019 journey was the acquisition of fellow asset manager Pacific Fonder. The move was devised to “strengthen our management organization, marketing organization and our fund offering,” according to Ekelund. The acquired range of funds includes Pacific Precious, a multi-strategy fund that provides exposure to the price development of precious metals such as gold, silver, palladium and platinum.
After Atlant Multi-Strategy took the third place in the same category at last year’s Nordic Hedge Award, Ekelund said that “Atlant Fonder is working towards its long-term goal of becoming the obvious first-line choice in Sweden for market-neutral hedge funds and to be nominated and win an award is a pat on the shoulder and an indication that we are on the right path.” The extended fund offering through the acquisition of Pacific Fonder and the crown of the “Best Nordic Fund of Hedge Funds” of 2019 are clear indications that Atlant Fonder is on the right path of becoming an attractive one-stop shop for hedge fund investors in Sweden. “We continue to work hard to be one of Sweden’s leading players in alternative investments,” Ekelund concludes.
Second Place: AIM Diversified Strategies
The second place on the podium in this award category goes to AIM Diversified Strategies, a fund of funds investing in alternative strategies run by hedge fund behemoths such as Citadel Advisors, D.E. Shaw & Co., Renaissance Technologies and Two Sigma. AIM Diversified Strategies delivered the highest inception-to-date annualized return among the Nordic funds of hedge funds still employing the classical FoHFs setup where one allocates directly to external managers.
“Everyone in our team has worked very hard and we are delighted by the strong performance and the positive response,” comments, Miikka Hautamaki, the CEO of Finnish asset manager AIM Capital, on the achievement. “It is an absolute honour to be among the top three Nordic funds of hedge funds,” he adds. “We could not be happier to be recognized given Nordic Hedge Award’s stature.”
Whereas many have dubbed the classic FoHFs setup obsolete, AIM Diversified Strategies maintains an edge that allows the fund to survive and thrive. The edge revolves around long-lasting relationships with the highest-quality managers of the likes of Citadel Advisors and Renaissance Technologies. “We have been investing in hedge funds since 2001,” Hautamaki tells HedgeNordic. “Based on our observations and experiences of hedge fund performance in different market cycles, we have differentiated our approach by focusing on managers that have a proven and tested investment process producing persistent and uncorrelated returns, even in extreme market conditions.”
The number of these high-quality managers is quite small and relatively inaccessible for smaller institutional investors. “Such managers are mostly very capacity constrained, which at times poses challenges to portfolio construction, but through our long-standing relationships, we have been able to maintain the portfolio as we want it to be,” says Hautamaki.
Third Place: Formuepleje Merkur
Formuepleje Merkur, the fund of funds managed by Danish asset manager Formuepleje, rounds up the top three list in the “Best Nordic Fund of Hedge Funds” category. Managed by Leif Hasager and Otto Friedrichsen, the Formuepleje fund of funds has been on the podium at the Nordic Hedge Award for a second consecutive year.
Formuepleje Merkur gained 10.9 percent last year, its best year since mid-2013. The Formuepleje fund was last year’s best-performing funds of hedge funds in the Nordics. Whereas Formuepleje Merkur was originally established in 1998, the current strategy differs markedly from the approach used more than 20 years ago. By allocating to Formuepleje funds, externally-managed vehicles and other products, Formuepleje Merkur aims to achieve attractive returns over the long term that do not fluctuate with equities and bonds.
After a strategy reshuffle several years ago, Formuepleje Merkur sought to deliver uncorrelated returns by predominantly allocating capital to four main groups of strategies: alternative products seeking to generate market-independent returns, alpha-generating strategies, strategies capitalizing on market imperfections, and opportunistic strategies. The fund’s fund portfolio at the end of February featured funds such as the Greater China Credit Fund, Absalon Global High Yield, Formuepleje Better World Environmental Leaders, Formuepleje Globale Aktier, Triple Alfa Global Equities, among others.
The “Best Nordic Fund of Hedge Funds” award category was supported and presented by RBC Investor & Treasury Services.