Not Carved in Stone


Stockholm (HedgeNordic) – Carve Capital, in which Brummer & Partners has maintained a minority stake of close to 50 percent, had decided to liquidate its Carve funds due to “disappointing returns in recent years, a declining asset base and uncertain future opportunities.” Brummer Multi-Strategy, the core of Brummer & Partners, has never invested in the Carve funds and is not affected by the decision.

“Although a difficult decision to make, the logic behind liquidating Carve is clear,” comments Per Josefsson, Chairman of Carve Capital. “With a declining asset base, a continued unfavorable and difficult-to-assess relationship between equities and corporate bonds, the management company believes that the conditions no longer exist to deliver the investment goals both in the short and long term in the firm’s current format,” he adds. Chief Investment Officer Michael Falken goes on to say that “I still see great potential, but to build on this potential more time is needed which we do not have in this setting.”

Carve, which stands for Cross Asset Relative Value Equity, offers two feeder funds – Carve 1 and Carve 2 – with different liquidity and lock-up characteristics. The two versions of the global equity and credit hedge fund combined a long/short equity strategy with capital structure arbitrage. Carve 1 and Carve 2 had delivered an annualized return of 6.1 percent and 5.5 percent since launching in November 2012 through the end of 2017, but the performance “has been unsatisfactory” since then, according to a letter penned by Peter Thelin, Managing Director at Carve Capital. Carve 2, which has been part of the Nordic Hedge Index, generated an annualized return of 0.9 percent since inception through the end of July this year after incurring a cumulative loss of 20 percent in the past 36 months.

“In a letter sent to investors at the beginning of April, we wrote that we expected strong returns given the extreme situation in financial markets,” Thelin writes in the letter announcing the decision to close the Carve funds. “But the portfolio has not recovered quickly enough,” he continues. According to Thelin, the main reasons for this development include:

  • “Massive central bank interventions that have broken down the normal relationships between equity and credit while leading to a sharp stock market rally.”
  • “With our market-neutral exposure in capital structure investments, we have not managed to capitalise on the market rally we have seen in recent months.”
  • “Our strategy of being long value stocks and short highly-valued stocks has contributed to a weak result in recent years, not least this year.”

The portfolios maintained by the Carve funds have been de-risked since the decision to close the funds was made, with the portfolios essentially sitting on cash assets as of August 15. Carve Capital has also decided not to charge management fees from August 14 and keep the funds open for an extra redemption on August 31, with full and final payment as soon as possible. The final payment is expected to take place no later than ten banking days after the redemption date. Carve 2 had SEK 2.59 billion under management at the end of July, with Carve 1 managing an additional SEK 566 million.


Photo by Evan Wise on Unsplash


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Eugeniu Guzun
Eugeniu Guzun
Eugeniu Guzun serves as a data analyst responsible for maintaining and gatekeeping the Nordic Hedge Index, and as a journalist covering the Nordic hedge fund industry for HedgeNordic. Eugeniu completed his Master’s degree at the Stockholm School of Economics in 2018. Write to Eugeniu Guzun at

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