Month in Review – October 2021

Stockholm (HedgeNordic) – Nordic hedge funds gained 0.7 percent on average (94 percent reported) in October, marking a return to positive trajectory after recording their worst monthly performance since March last year in September. Two hedge funds recorded heavy losses during the month. The Nordic hedge fund industry is now up 5.1 percent for the year with only two months left until the end of the year.

Four of the five strategy categories within the Nordic Hedge Index enjoyed gains for October. Fixed-income hedge funds as a group were down 0.7 percent in October, reflecting the explosion in interest rate volatility and repricing of central banks’ path of expected future policy rates towards the end of the month. On the other hand, CTAs and multi-strategy funds enjoyed strong performance last month, gaining 1.7 percent and 1.6 percent, respectively. Multi-strategy funds gained 5.2 percent in the first ten months of the year, while CTAs were up 2.3 percent over the same period.

Equity hedge funds, the strongest performing strategy category within the Nordic Hedge Index this year, advanced 0.7 percent on average in October even as long/short equity fund Gladiator Fond booked a loss of 29 percent last month. Equity hedge funds gained 8.4 percent on average year-to-date through the end of October. Funds of hedge funds were up 0.9 percent in October, the group’s ninth consecutive month of positive performance, to extend their year-to-date advance to 6.0 percent.

At a country level, Finnish hedge funds as a group enjoyed the highest gains in October, with the group ending the month up about 2.0 percent to bring the year-to-date advance to 8.2 percent. Danish and Norwegian hedge funds gained a similar 0.8 percent last month, with the Danish hedge fund industry now up 4.3 percent for the first ten months of the year and the Norwegian industry up 10.1 percent. Swedish hedge funds, which account for the largest portion of the Nordic hedge fund industry, are up 3.3 percent for the first ten months of 2021 after booking an average gain of 0.3 percent in October.

The dispersion between last month’s best- and worst-performing members of the Nordic Hedge Index widened month-over-month. In October, the top 20 percent of Nordic hedge funds gained 5.7 percent on average, while the bottom 20 percent lost 4.2 percent. In September, the top 20 percent were up 1.8 percent on average and the bottom 20 percent were down 5.1 percent. About two in every three members of the Nordic Hedge Index with reported October figures reported gains for last month.

Top Performers in October

Energy transition-focused Proxy Renewable Long/Short Energy Fund was last month’s best-performing member of the Nordic Hedge Index with a monthly advance of 14.5 percent, the fund’s best month since launching in late 2018. Last month’s advance brought the fund’s yearly performance back in positive territory at 13.5 percent. Activist fund Accendo Capital followed suit with a monthly gain of 12.6 percent, extending its 2021 advance to 45.2 percent.

Atlant Green Tech Metals, which shifted its focus from precious metals to “green” metals around the midpoint of the year, was up 10.1 percent in October to bring its year-to-date performance back into positive territory at 1.1 percent. Borea Utbytte, a special fund investing in Norwegian bank stocks and equity certificates, is this year’s best-performing member of the Nordic Hedge Index with an advance of 53.9 percent after gaining 8.3 percent in October alone. Systematic value-focused fund HCP Quant was up 7.8 percent last month to extend its year-to-date gains to 43.1 percent.

On the other side of the spectrum, Max Mitteregger’s long/short equity fund Gladiator Fond booked a loss of 29 percent in October, its largest ever monthly loss since launching in 2005, to bring the year-to-date decline to a little over 50 percent. Mitteregger’s biotechnology investments accounted for most of Gladiator Fond’s losses in October. Brummer & Partners-backed Frost, a fixed-income relative value fund focused on Scandinavian fixed-income markets, was heavily impacted by the bond market turmoil in October, with the fund booking a loss of 17.7 percent for the month.

The Month in Review for October 2021 can be downloaded below: