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Nordic Cross Fund to Merge with Carnegie “Equivalent”

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Stockholm (HedgeNordic) – Nordic Cross Total Return Bond Fund, one of the funds managed by Swedish hedge fund boutique Nordic Cross, will merge into Carnegie Fonder’s Carnegie Corporate Bond fund. The decision to merge and close Nordic Cross Total Return Bond Fund “leads to streamlining of operational processes of all funds managed by the same investment manager (i.e. Carnegie Fonder AB),” according to a notice to investors.

“The decision to close the Merging Sub-Fund and to merge the shareholders into the Receiving Sub-Fund leads to streamlining of operational processes of all funds managed by the same investment manager (i.e. Carnegie Fonder AB).”

The decision to merge and close Nordic Cross Total Return Bond Fund, which oversees SEK 731 million in assets under management, comes after the announcement that Carnegie Fonder will acquire the Nordic Cross funds. With both Carnegie Fonder and Nordic Cross being independent affiliates of Altor-owned Carneo, the multi-boutique asset management group is now in the process of merging its Swedish fund management operations under the umbrella of Carnegie Fonder. The merger of Nordic Cross Total Return Bond into Carnegie Fonder’s SEK 9.9 billion Carnegie Corporate Bond fund “gives rise to economies of scale in the management operations of Carnegie Fonder AB which, from an economic perspective, benefits the shareholders of all its managed funds.”

“This gives rise to economies of scale in the management operations of Carnegie Fonder AB which, from an economic perspective, benefits the shareholders of all its managed funds.”

Launched in the second half of 2017, Nordic Cross Total Return Bond Fund relied on three main pillars to provide exposure to BB and BBB corporate credit while maintaining cash on hand for its opportunistic strategy employed in turbulent market environments. The fund’s core pillar was a 60 percent allocation – on average – to cross-over bonds with satisfactory credit quality corresponding to BB to BBB credit ratings. Nordic Cross Total Bond Return Fund also allocated a risk budget to call options that provided additional exposure to the BB to BBB credit risk spectrum during calm market environments. The additional credit exposure through derivatives had low capital utilization, which left the fund’s portfolio management team with ample cash to deploy opportunistically in times of turmoil and liquidity crunches.

Nordic Cross Total Return Bond Fund generated an annualized return of 2.4 percent since launching in August 2017 through the end of last year. The fund, which reached its five-year anniversary at the beginning of August, is down 9.3 percent year-to-date through the end of July, with its annualized return since inception now sitting at 0.2 percent. Through the merger, the fund’s investors will become investors in Carnegie Corporate Bond, which has a similar investment strategy and risk profile. Carnegie Corporate Bond is down 5.6 percent in the first seven months of 2022, having delivered a cumulative return of 0.5 percent over the previous five years.

The investors who do not wish to participate in the merger have the opportunity to redeem their units in Nordic Cross Total Return Bond Fund up to and including September 23. To prepare for the merger, Nordic Cross Total Return Bond Fund will be closed for trading during the period of September 26 to September 30. The merger will become effective on October 3, 2022. The fund is closed for purchase transactions as of August 24.

 

Photo by pine watt on Unsplash

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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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