Stockholm (HedgeNordic) – After a strong first two months of the year, Nordic hedge funds ended the month of March down 1.2 percent on average (96 percent reported). Nordic CTAs struggled the most last month, as many trend-followers were wrong-footed amid the wild bond market gyrations caused by the collapse of Silicon Vallue Bank and Signature Bank.
Four of the five strategy categories within the Nordic Hedge Index ended March in negative territory, with diversified (formerly multi-strategy) funds managing to edge up 0.1 percent. Nordic CTAs lost 4.3 percent on average in March, as trends in equities and fixed income reversed sharply following the collapse of Silicon Valley Bank. Fixed-income hedge funds fell by 2.0 percent on average to end the first quarter in positive territory at 1.6 percent. Equity hedge funds were down 1.3 percent in March to trim their 2023 advance to 1.8 percent. Multi-manager funds, formerly funds of hedge funds, edged down 0.8 percent on average last month.
At a country level, Finnish hedge funds lost the most in March with an average decline of 2.4 percent, as managed futures vehicles dragged down the group’s performance. The Swedish hedge fund industry, which dominates the Nordic hedge fund universe in terms of number of active hedge funds, was down 1.4 percent in March to end the first quarter of 2023 in positive territory at 0.1 percent. Danish hedge funds as a group fell by 1.1 percent to end the first three months of 2023 up 1.2 percent. Norwegian hedge funds edged down 0.1 percent to end the first quarter of the year in positive territory at 3.1 percent.
The performance dispersion between last month’s best- and worst-performing members of the Nordic Hedge Index widened month-over-month. In March, the top 20 percent of Nordic hedge funds gained 2.8 percent and the bottom 20 percent lost 5.7 percent, representing a top-to-bottom dispersion of 8.5 percent versus 5.9 percent in February. In February, the top 20 percent were up 3.4 percent and the bottom 20 percent were down 2.5 percent. Only one in every three members of the Nordic Hedge Index with reported March figures posted gains last month.
Best Performers in March
After a difficult February, Norwegian discretionary global macro fund NOR Global Makro was last month’s best-performing member of the Nordic Hedge Index with an advance of 17.8 percent. The March performance largely reflects a reversal in the performance of the macro hedge fund’s positions that led to a loss of 18.6 percent in February. NOR Global Makro has been bullish on US T-Notes and precious metals since the last quarter of 2022. Silver was a significant detractor from its performance in February, but contributed strongly to its performance in March alongside the fund’s bond positions. The macro hedge fund ended the first quarter in positive territory at 4.9 percent.
Tech-focused long/short equity fund Thyra Hedge followed suit with a monthly advance of 4.6 percent in March, which brought its first-quarter performance to 9.6 percent. Two Pareto long/short equity funds managed by different teams also enjoyed strong performance in March. Nordic-focused Pareto Nordic Omega advanced 4.5 percent last month to end the first quarter up 10.2 percent. Pareto Total, a long-biased equity long/short fund focusing on global large- and mega-cap stocks, booked a monthly gain of 4.2 percent to end the first three months of 2023 up 16.9 percent. Three Pareto funds are in this year’s top five best-performing constituents of the Nordic Hedge Index.
Nordea 1 – Alpha 15 MA Fund, a multi-asset, multi-strategy fund harvesting different risk premia, gained 4.0 percent in March to bring its 2023 performance in positive territory at 0.7 percent. The Alpha 15 fund is part of Nordea Asset Management’s Alpha Solutions family that also includes the Alpha 7 MA and Alpha 10 MA funds, with all sharing the same investment approach but exhibiting different risk-return profiles.
The Month in Review for March 2023 can be downloaded below:
