Due for a Comeback

Stockholm (HedgeNordic) – This year’s turbulence in global financial markets has provided hedge funds with an opportunity to shine. Although Nordic hedge funds as a group are enjoying a relatively good year, many funds struggled mightily in 2020. Some of the laggards have closed down, but others have shown resilience and desire to come back stronger. Despite experiencing a difficult 2020, Catella Fonder’s range of hedge funds is eying a comeback.

“We have three hedge funds, a small EUR 14m fund called Nordic Long Short, the hedge fund of approximately EUR 350m, and a credit fund called Credit Opportunity with an asset volume of EUR 60m,” says Fredric Calles (pictured), the new CEO of Catella Fonder. “In Credit Opportunity Fund, we are now back at high water mark and generating performance fees, and in the hedge fund, performance is now a few percentage points short of high water mark after a very solid autumn,” he continues. “We are doing a comeback.”

Catella’s flagship hedge fund, Catella Hedgefond, has seen its assets under management fall from close to SEK 7 billion at the end of last year to SEK 3.45 billion at the end of November after booking a loss of 14.4 percent in March. “Many absolute return funds are long-only funds in some aspects, make money when markets go up and lose it when markets go down,” says Calles. “But they should have some kind of market neutrality, uncorrelated performance in their strategies,” he argues. “Many funds, including our funds, have failed to deliver on that. That is one of the most important reasons for investors to pull out money.”

“Many absolute return funds are long-only funds in some aspects. But they should have some kind of market neutrality, uncorrelated performance in their strategies.”

Catella Hedgefond managed to recoup some of the losses incurred in the first quarter, with the fund ending the first 11 months of 2020 down 4.9 percent. Catella Nordic Long Short Equity was down 17.2 percent in the first 11 months of this year, on pace to register its third consecutive loss-making year. The fund oversees SEK 153 million as of the end of November, down from SEK 261 million at the end of last year. Catella Credit Opportunity, on the other hand, is on pace to register its seventh consecutive year of positive returns after gaining 0.8 percent year-to-date through the end of November. The fund has SEK 569 million under management as of the end of November, slightly down from the SEK 584 million overseen at the end of 2019.

Like many other funds and hedge funds, Catella Fonder’s range of 13 funds was hit by the March wave of volatility and turmoil triggered by the coronavirus pandemic. “We had positioned ourselves wrong and lost money, which hurt us in terms of our AUM, but we have since then come back quite significantly in all our products,” says Calles. “We have done changes in our fund strategies, how we position ourselves in the different funds,” Calles explains. “We’ve done changes in the way how we work as a team instead of individuals, in order to gain more of an information exchange between asset managers.”

“We have done changes in our fund strategies, how we position ourselves in the different funds. We’ve done changes in the way how we work as a team instead of individuals, in order to gain more of an information exchange between asset managers.”

Fredric Calles was appointed as the new CEO of Catella’s active and alternative asset management arm in August of this year after Catella AB sold 70 percent of Catella Funds to Athanase Industrial Partner. “It has been a rather short time since August when I took over as CEO, but we see some progress already and have a clear plan going ahead,” says Calles.

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Eugeniu Guzun serves as a data analyst responsible for maintaining and gatekeeping the Nordic Hedge Index (NHX), as well as being a novice columnist covering the Nordic hedge fund industry for HedgeNordic. Prior to joining HedgeNordic, Eugeniu had served as a columnist for a U.S. journal covering insider trading activity, activist campaigns and hedge fund moves. Eugeniu completed his Master’s degree at the Stockholm School of Economics in 2018.

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