Stockholm (HedgeNordic) – Norron Asset Management has decided to close down one of its hedge funds, market-neutral equity fund Norron Alpha, exactly five years after launch. Norron Alpha, originating from Norron’s long-only Swedish equity fund Norron Active, is closing down due to weaker-than-expected performance and low investor demand.
“Norron has decided to wind up Norron Alpha as we believe conditions do not exist for continuing to manage the fund,” Norron Asset Management writes in a press release. “The background is that Norron Alpha has not developed as desired and due to low demand.” The unitholders of Norron Alpha can swap their Norron Alpha investment to multi-strategy hedge fund Norron Target or can sell their units.
Norron Alpha originates from Norron’s long-only equity fund Norron Active, with the long side of Norron Alpha constituting a replica of the long-only fund’s portfolio. Norron Alpha achieves market-neutral exposure by shorting the OMX Stockholm Benchmark (SBX) – a capitalization-weighted total return index designed to track the performance of the Stockholm Exchange. Norron Alpha is shorting the SBX index using total return swaps, with the short side of the fund being monitored daily to ensure the fund is market neutral.
Despite getting off to a good start after advancing around 3 percent over the last four months of 2016 and gaining an additional 4.5 percent in its first full year of operation in 2017, market-neutral Norron Alpha has generated a cumulative loss of 11.8 percent since its inception in September 2016 through the end of July this year. The fund is down 6.7 percent in year-to-date through the end of July. Norron Alpha had only SEK 5 million in assets under management at the end of last month, down from over SEK 100 million at the end of last year. Long-only Norron Active, which currently oversees SEK 3.37 billion in assets under management, has generated an annualized return of 14.7 percent in the past five years versus the annualized return of 16.9 percent delivered by its benchmark, the OMX Stockholm Benchmark Index.
Norron Alpha has been managed by fund manager Gustaf Sjögren, a co-founder of Norron. Before working at Norron, Sjögren served as an institutional broker at Handelsbanken between 1986 and 1991 and also worked as a fund manager of the Reavinst Fond at Handelsbanken Fonder. He co-founded Catella Fonder in 1998 and became a partner the same year. Sjögren was the fund manager of Catella’s Reavinsfond between 1998 and 2003, but was also a co-founder and asset manager of Catella Hedgefond until 2010. He has also been managing Norron Active since its inception in September 2011.