Stockholm (HedgeNordic) – After ending the first quarter of 2023 on a sour note amid banking turmoil, Nordic hedge funds began the second quarter on a positive note with an average advance of 0.6 percent in April (as reported by 90 percent of funds). There was high dispersion in the performance of equity hedge funds, which dominated both the top and bottom of the performance table.
All five strategy categories within the Nordic Hedge Index ended the month of April in positive territory, with fixed-income and CTA managers gaining the most. After a difficult March, Nordic fixed-income hedge funds gained 1.2 percent in April to bring the group’s 2023 advance to 2.8 percent. CTAs, which were wrong-footed in March as trends in equities and fixed income reversed sharply following the collapse of Silicon Valley Bank, advanced 1.1 percent to trim their year-to-date decline to 3.8 percent. Multi-manager funds, formerly funds of hedge funds, gained 0.6 percent on average last month. Equity and diversified hedge funds edged up 0.3 percent and 0.2 percent, respectively, during the month of April.
At a country level, Norwegian hedge funds gained the most both in April and so far in 2023, reflecting the strong performance of funds under the umbrella of Pareto Asset Management, Borea Asset Management, and several other fund boutiques. The Norwegian hedge fund universe is up 4.8 percent in 2023. Danish hedge funds as a group gained 0.6 percent on average in April to end the four months of 2023 up 1.7 percent. Both Finnish and Swedish hedge funds advanced 0.4 percent on average in April. The Swedish hedge fund industry, which dominates the Nordic hedge fund universe in terms of the number of active hedge funds, edged up 0.5 percent in the first four months of the year.
The performance dispersion between last month’s best- and worst-performing members of the Nordic Hedge Index narrowed month-over-month. In April, the top 20 percent of Nordic hedge funds gained 3.4 percent and the bottom 20 percent lost 2.3 percent, representing a top-to-bottom dispersion of 5.8 percent versus 8.5 percent in March. In March, the top 20 percent were up 2.8 percent and the bottom 20 percent were down 5.7 percent. Two in every three members of the Nordic Hedge Index with reported April figures posted gains last month.
Top Performers in April
Borea Utbytte, an equity-focused fund investing in the Norwegian banking sector, was last month’s best-performing member of the Nordic Hedge Index with an advance of 6.6 percent. Last month’s advance brought its 2023 performance further into positive territory at 8.0 percent. Borea Utbytte’s performance in April reflected easing unrest and uncertainty in the global banking sector. The Bergen-based team running the fund expects further stress at certain American banks despite government intervention.
Three equity hedge funds under the umbrella of Pareto Asset Management made last month’s top five list of best performers within the Nordic Hedge Index. Nordic-focused Pareto Nordic Omega gained 5.3 percent in April to bring its performance for the first four months of 2023 to 16.1 percent. Pareto Nordic Alpha, set to merge into a long-only equity fund managed by the same portfolio management team, followed suit with an advance of 4.5 percent in April and 15.3 percent in the first four months of 2023.
Pareto Total, a long-biased equity long/short fund focusing on global large- and mega-cap stocks, booked a monthly gain of 4.5 percent in April to end the first four months of 2023 up 22.1 percent. The three Pareto funds are in this year’s top five best-performing constituents of the Nordic Hedge Index.
RPM Evolving CTA Fund, which invests in a small group of young and evolving CTA managers, ended the month of April up 4.4 percent to trim its 2023 decline to 3.2 percent. The fund gained 24.4 percent during 2022, the fund’s best yearly performance since launching in mid-2013.
The Month in Review for April 2023 can be downloaded below:
