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Carnegie Gets Credit Edge

Report: Systematic Strategies

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Stockholm (HedgeNordic) – Nordic Cross Credit Edge, one of the four hedge funds under the Nordic Cross brand, will be managed by Carnegie Fonder under a new name – Carnegie Credit Edge – using a similar strategy starting on October 3. Nordic Cross portfolio manager Emil Nordström (pictured) will continue to be responsible for the management of the fund.

Carnegie Fonder and Nordic Cross are independent affiliates of Altor-owned multi-boutique asset management group Carneo, which is now in the process of merging its Swedish fund management operations under the umbrella of Carnegie Fonder. The transition of Nordic Cross Credit Edge under the umbrella of Carnegie Fonder is part of this merging process. Earlier this summer, Nordic Cross announced the liquidation of its small-cap-focused long/short equity fund – Nordic Cross Small Cap Edge – due to assets falling below an optimal level, as well as announced the merger of Nordic Cross Total Return Bond Fund into Carnegie Fonder’s Carnegie Corporate Bond fund.

The Swedish Financial Supervisory Authority, Finansinspektionen, has approved the transfer of the management of Nordic Cross Credit Edge to Carnegie Fonder due to take place on October 3. The fund will change its name to Carnegie Credit Edge. In connection with taking over the fund’s management, Carnegie Fonder has also received approval from Finansinspektionen to change some of the fund’s regulations, including the introduction of a cap on the performance-based fee, the ability to invest in a slightly wider set of securities, among others. The fund will continue to be managed by Emil Nordström with a similar investment and risk profile as before.

Launched in mid-2018, Nordic Cross Credit Edge’s strategy so far involved getting exposure to high-yield credit markets using derivatives such as call options to exploit the long- and well-known low-volatility anomaly in high-yield bonds. This approach to getting exposure to high-yield bond markets requires little capital and leaves the portfolio management team with ample liquidity to allocate to other opportunities. As previously explained by Nordström, the capital left after paying option premiums is held in high-quality and liquid financial instruments that can be quickly converted into cash to invest in Nordic corporate bonds that sporadically trade at significant discounts to the initial par values during liquidity squeezes in corporate bond markets.

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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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