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The Tenoris Approach to Risk Mitigation

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Stockholm (HedgeNordic) – New up-and-coming funds such as Tenoris One contribute to the heterogeneity that had already been inherent in the Nordic hedge fund industry. Launched by Henric Nordin (pictured) and Jacob Andersson in 2020, Tenoris One is a multi-strategy, multi-asset fund investing in a wide range of assets, including hard commodities, soft commodities, currencies, stock market indices, and individual stocks, among others. This “multi-asset” focus stems from the duo’s objective to achieve attractive returns with low risk.

“Our objective is to offer a solid return, but we are more focused on the risk side of our portfolio,” explains Henric Nordin, who has a non-traditional background for the money management industry as a management consultant. “We prioritize risk mitigation so much more than return generation,” emphasizes Nordin. “One cannot expect much of a return on any investment in the long run without focusing on risk mitigation.”

“We prioritize risk mitigation so much more than return generation.”

The duo’s approach to risk mitigation involves building a concentrated portfolio across a diversified mix of asset classes. “The ground on which we are always standing on is that we have a very diversified portfolio, extremely diversified,” Nordin tells HedgeNordic. “We look into a very broad set of assets, ranging from hard commodities such as gold, silver, copper and aluminum, less-traditional soft commodities such as coffee and cocoa beans, to stock market indices, individual stocks and others,” he continues. The focus, however, is on making investments outside the traditional asset classes such as equities and bonds.

Three Legs

Henric Nordin and Jacob Andersson focus not only on investing flexibly across different asset classes but also employ a multi-strategy approach across those asset classes. “The main leg of the fund, perhaps in the range of 70 to 80 percent of its exposure, is based on a systematic strategy working with huge amounts of data to capture trends based on technical analysis indicators,” explains Nordin. “Our approach is based on finding and following trends in different assets in order to achieve what we call true diversification.”

“The main leg of the fund, perhaps in the range of 70 to 80 percent of its exposure, is based on a systematic strategy working with huge amounts of data to capture trends based on technical analysis indicators.”

“Our goal is always to be involved as little as possible when it comes to investment decisions in the quantitative strategy,” says Nordin about the technical analysis-focused approach developed together with Jacob Andersson, trader in the power market. “This approach is based on the premise that we don’t think our decision-making process is better than our system,” he emphasizes. “We always follow the system and the system is guiding us both in terms of assigning the weights to different asset classes as well as which positions we want to take.”

Tenoris One’s investment approach sits on two additional strategy legs: a so-called “permanent” strategy, and a “dynamic” strategy. The permanent strategy involves investing in a “number of assets that will make sense no matter the market conditions,” explains Nordin. The dynamic strategy, which may account for up to ten percent of Tenoris One’s exposure, “is very much focused on fully-discretionary decisions meant to capture various spontaneous opportunities arising in the market,” according to the fund manager. This is a small part of the total portfolio that depends on exogenous, broader-market events such as market crashes, among others.

“We do want to have these three legs to stand on because if one would not work in a given market environment, at least one of the other ones will hopefully make up for that.”

“We do want to have these three legs to stand on because if one would not work in a given market environment, at least one of the other ones will hopefully make up for that,” argues Nordin. With their fund launched only in October of last year, Henric Nordin and Jacob Andersson have yet to engage the “dynamic” leg of their approach. “We haven’t really used the dynamic strategy so far because we haven’t seen any opportunities since we started,” says Nordin. “This dynamic part focuses on capturing huge opportunities that arise every second or third year. We want to avoid making all the decisions based on gut feeling, we never gamble on the fund’s overall return with our discretionary decisions.”

Investor Expectations

Up 5.5 percent in 2021 and 5.7 percent since launching in October 2020, Tenoris One seeks to achieve an average annual return in the range of seven to 12 percent with a standard deviation that is lower than five percent. “With some investors expecting returns of 25 percent a year or very high double-digit returns during the current market conditions, Tenoris One perhaps is not the best option of them,” argues Nordin. This fund caters more to risk-averse retail and institutional investors who can be satisfied with six, seven or eight percent per year.

“Whatever we do, we will not step away from our goal to maintain low risk.”

“We are playing a different sport compared to other hedge fund managers and investors with high exposure to the ups and downs of equity markets,” Nordin points out. “Tenoris One is an alternative for investors seeking something that is totally different from everything else, or at least, the majority of everything else,” he continues. “Whatever we do, we will not step away from our goal to maintain low risk.”

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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 eugene@hedgenordic.com

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