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Month in Review: High Dispersion Among Equity Funds

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Stockholm (HedgeNordic) – Nordic hedge funds experienced an estimated decline of 0.8 percent in May (as reported by 86 percent of funds) amid high dispersion and predominantly negative performance among equity hedge funds. While some funds such as tech-focused Thyra Hedge and HCP Focus benefited from the thriving buzz surrounding chipmaker Nvidia and artificial intelligence, others faced challenges due to significant declines in the share prices of companies like Hexatronic, and Embracer.

Month in Review – May 2023

The three largest strategy categories within the Nordic Hedge Index ended the month of May in negative territory, with equity-focused funds struggling the most. Trend-following CTAs managed to gain an estimated 0.7 percent last month, reducing the group’s decline for 2023 to 3.2 percent. Multi-manager hedge funds, with Brummer Multi-Strategy leading the way, made modest gains of 0.2 percent in May, increasing their year-to-date advance to 0.7 percent.

Equity hedge funds saw an average decline of 1.6 percent in May despite dominating last month’s list of top performers within the Nordic Hedge Index. Fixed-income and diversified hedge funds experienced a similar decline of 0.5 percent in May, with fixed-income managers ending the first five months of 2023 in positive territory at 2.5 percent. Diversified hedge funds, on the other hand, edged up 0.3 percent during the first five months of this year.

At the country level, the Finnish hedge fund industry was the only one to end the month of May in positive territory, with a gain of 0.1 percent. In contrast, Norwegian hedge funds booked an average decline of 1.8 percent to trim their 2023 advance to 2.1 percent. The Swedish hedge fund industry, which dominates the Nordic hedge fund universe in terms of the number of active hedge funds, was down 0.9 percent in May, bringing the group’s performance for the year in negative territory at 0.5 percent. Danish hedge funds faced a decline of 0.6 percent in May, reducing their advance for the year to 1.4 percent.

The performance dispersion between the best- and worst-performing members of the Nordic Hedge Index widened month-over-month. In May, the top 20 percent of Nordic hedge funds gained 2.0 percent and the bottom 20 percent lost 4.9 percent, resulting in a top-to-bottom dispersion of 6.8 percent versus 5.8 percent in April. In April, the top 20 percent were up 3.4 percent and the bottom 20 percent were down 2.3 percent. Two out of every five members of the Nordic Hedge Index with reported May figures achieved gains last month.

Top Performers in May

Thyra Hedge, a tech-focused long/short equity fund, emerged as the best-performing member of the Nordic Hedge Index in May with an advance of 6.4 percent. The surge of interest in artificial intelligence, with chipmaker Nvidia playing a significant role as one of its primary beneficiaries and enablers, greatly contributed to Thyra Hedge’s strong performance, both in May and year-to-date. The fund gained 11.6 percent during the first five months of 2023.

HCP Focus Fund, a long-only equity hedge fund maintaining a concentrated portfolio of 12 companies benefiting from the digital revolution, also benefited from its large position in Nvidia. HCP Focus advanced 6.0 percent in May to bring its performance for the first five months of 2023 to approximately 38 percent, showing its progress in recovering from its drawdown in 2022.

Energy transition-focused Proxy Renewable Long/Short Energy achieved a gain of 4.0 percent in May to take its performance for 2023 into positive territory at 2.0 percent. This follows an advance of 24 percent in 2022. Long/short equity fund Coeli Global Opportunities advanced 6.4 percent over the first five months of 2023 after gaining 2.9 percent in May alone. Trend-following vehicle Lynx (Sweden) managed to trim its 2023 decline to 8.3 percent after gaining 2.8 percent in May. Lynx enjoyed its second-best year on record in 2022 with an advance of about 36 percent.

 

The Month in Review for May 2023 can be downloaded below:

 

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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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