Stockholm (HedgeNordic) – The term “multi-strategy hedge fund” does not have clear edges and is colloquially used for vehicles that have the discretion to use a combination of strategies across asset classes. Within the Nordic Hedge Index, the multi-strategy category represents the most diverse and inclusive category, featuring unique funds that do not fit any other clear classification.
Winner: Ress Life Investments
Two of last year’s podium winners in the “Best Nordic Multi-Strategy Hedge Fund” category stand on this year’s podium again. Ress Life Investments, a life settlement vehicle that invests in the secondary market for U.S. life insurance policies, received the main prize in this category for the second consecutive year.
“Our investment strategy of selectively purchasing U.S. life insurance policies is rather unique and provides uncorrelated risk-adjusted returns which are also rather unique, especially in the current market turmoil,” Jonas Mårtenson, the founder of Resscapital, tells HedgeNordic. “We have also had a long-term approach of pursuing the same investment strategy for many years, which is now paying off,” Mårtenson comments on receiving the “Best Nordic Multi-Strategy Hedge Fund” recognition for the second year in a row.
Ress Life Investments delivered an annualized return of over eight percent in the three years to the end of 2019, a period that covered both up and down markets. The robust returns delivered by Resscapital’s strategy of investing in the secondary market of U.S. life settlements exhibit no correlation to traditional asset classes. “The main risk factor in a life insurance portfolio – longevity – is fundamentally uncorrelated to other major asset classes, Mårtenson told HedgeNordic earlier this year.
After achieving its best annual performance on record in 2018, Ress Life Investments enjoyed another strong year in 2019. The fund overseen by Anton Pozine, Head of Portfolio Management, returned 8.0 percent in 2019 and saw its assets under management increase from $117 million at the end of 2018 to over $180 million. “2019 was a successful year and we are pleased that assets under management increased substantially and now exceed 180 million US dollars,” wrote Pozine in an update to investors.
The trophy for the “Best Nordic Multi-Strategy Hedge Fund” and the increasing investor interest in Ress Life Investments are a by-product of the strategy’s ability to deliver solid and consistent uncorrelated returns to investors. The secondary market for life insurance is estimated to have an annual volume of policies sold between $4 to $5 billion, whereas the total market size of outstanding life insurances stands at $20.5 trillion. “It is a drop in the ocean,” highlighted Mårtenson. The gradual increase in the supply of policies in the secondary market enables Ress Life Investments to continue purchasing more policies with attractive risk-reward profiles and generate attractive risk-adjusted and uncorrelated returns to investors.
Second Place: Formuepleje Penta
Formuepleje Penta won second prize in the “Best Nordic Multi-Strategy Hedge Fund” category. Formuepleje Penta, a multi-strategy leveraged fund maintaining a balanced portfolio of Danish mortgage bonds (between 70 and 80 percent) and global equities (20 and 30 percent), exhibits the same risk profile as a portfolio that invests 100 percent in equities. In addition to the leveraged long-only portfolios in equities and bonds, the fund also maintains a market-neutral equity allocation.
“Penta has outperformed global equities in eight out of the last ten years and has delivered satisfactory returns over a long period,” Søren Astrup, CEO and partner at Danish asset manager Formuepleje, said earlier this year. “For many years, Penta has delivered compelling results, and Penta is one of the Formuepleje’s best investment solutions among the investment alternatives with a risk profile that corresponds to an investment of 100 percent in global equities,” he added.
Formuepleje Penta had generated an annualized return of 18.3 percent in the past ten years to the end of last year. Over the past two years, Penta has shown its worth in both up and down markets. “Although 2018 was quite unsatisfactory, we proved that Penta’s risk characteristics are better than a pure equity portfolio,” said Astrup earlier this year. Formuepleje Penta was down about 2.5 percent in 2018, and gained about 34 percent in the following year. “2019, on the other hand, was a good investment year, with Penta delivering a return of about 34 percent – again better than the world stock index, which delivered 29.1 percent.” The first quarter of 2020, however, proved to be challenging for Formuepleje Penta, as equities and bonds, along with many other assets, were severely shaken by the coronavirus-fuelled market turmoil.
Third Place: Formue Nord Markedsneutral
Formue Nord Markedsneutral, managed by a five-member team out of the Danish city of Aalborg, stands on the podium in the “Best Nordic Multi-Strategy Hedge Fund” category for a second consecutive year. In 2019, the market-neutral fund focused on special situations enjoyed its best year on record with an annual return of 17 percent, following a nearly 14 percent return in 2018 and nine percent in 2017.
“It’s always an honor to be nominated for the Nordic Hedge Award and a huge testament to the hard work of the whole team at Formue Nord,” Rasmus Viggers, the founder and chief investment officer at Formue Nord, tells HedgeNordic. “We take pride in adding value to all our investors through stable and uncorrelated returns,” he adds. “Now we have been nominated again, and we really appreciate this professional recognition, which goes to show that we are on the right track.”
The primary strategy of Formue Nord Markedsneutral revolves around funding micro-, small- and medium-sized companies via bridge financing, underwriting or buying and exercising subscription rights. After three years of solid performance, strong investor capital inflows, and a shrinking investment opportunity on a relative scale to the fund’s increasing size, the team decided to temporarily close the fund to new investments in April 2019. In anticipation of more opportunities, Formue Nord Markedsneutral opened the fund to new investors at the beginning of 2020 for one last time before closing the doors to investors indefinitely.
As a result of strong performance and increased investor interest, Formue Nord Markedsneutral saw its assets under management increase from €26 million at the end of 2018 to €43 million at the end of 2019 and €74 million at the end of March this year. “Continuing to grow our AUM and still delivering high returns to our co-investors, is something that very important to us,” says Viggers. “We just finished a successful fundraising at the beginning of the year in our flagship fund, Formue Nord Markedsneutral, and now we are working hard to deploy this capital in attractive investments.” Although the spread of the coronavirus and its consequences unsettled financial markets in the first quarter, Formue Nord Markedsneutral is enjoying another strong year in 2020, gaining 6.8 percent year-to-date through the end of March.
The “Best Nordic Multi-Strategy Hedge Fund” award category was supported and presented by Harvest Advokatbyrå.