Stockholm (HedgeNordic) – Following a flat month in August, Nordic hedge funds dipped by an estimated 0.1 percent in September (with 91 percent of funds reporting). Trend-following CTAs led by Lynx, fixed-income strategies, and some long/short equity funds stood out during the month. Fixed-income hedge funds, in particular, have enjoyed a solid recovery over the past four months after facing challenges in 2022.

Out of the six strategy categories tracked by HedgeNordic, three registered positive results in September. CTAs and fixed-income strategies were the frontrunners in terms of gains. The small cohort of Nordic CTAs posted an average gain of 1.2 percent, cutting the year-to-date decline to 2.4 percent. Fixed-income hedge funds recorded an average gain of 1.0 percent, concluding the first three quarters of 2023 in positive territory at 7.3 percent.

Multi-manager hedge funds made slight progress in September, edging up an estimated 0.3 percent and ending the first nine months of 2023 with a 2.0 percent gain. Both long/short equity funds and the recently introduced category of long-only equity hedge funds ended September in the red. Equity hedge funds were down 0.7 percent in September to trim their year-to-date advance to 1.5 percent. Meanwhile, long-only equity funds experienced an average decline of 3.8 percent to bring their 2023 advance down to 12.8 percent. Diversified hedge funds slipped into negative territory for the first nine months of 2023 after booking an average decline of 0.9 percent in September.

The performance dispersion between the best- and worst-performing members of the Nordic Hedge Index widened month-over-month. In September, the top 20 percent of Nordic hedge funds gained 3.1 percent and the bottom 20 percent lost 3.7 percent, resulting in a top-to-bottom dispersion of 6.8 percent versus 6.1 percent in August. During the month of August, the top 20 percent were up 2.6 percent on average and the bottom 20 percent were down 3.5 percent. About half of the members of the Nordic Hedge Index with reported September figures posted gains for the month.

Top NHX Performers in September

Pensum Global Opportunities emerged as the top performer in the Nordic Hedge Index for September with a monthly gain of 9.3 percent. The opportunistic long/short equity fund overseen by Peter Andersland has rebounded significantly over the past two months following a challenging first half of the year. Lynx Asset Management’s trend-following vehicle, Lynx, also enjoyed strong performance in September with a return of 7.8 percent.

CABA Flex, which harvests risk premiums in Scandinavian mortgage bond markets through a buy-and-hold strategy within a three-year maturity structure, gained 4.8 percent in September. Ten months into its existence, CABA Flex has delivered a cumulative return of 15 percent, with almost 11 percent gained in the past four months alone. Nordea’s Nordic Rates Opportunity Fund II, meanwhile, advanced by 4.4 percent in September to bring its year-to-date performance further into positive territory at 5.7 percent.

Gersemi Shipping Fund, a long/short shipping hedge fund managed by shipping specialist Joakim Hannisdahl, gained 4.2 percent in September, bringing its return since its launch in July this year to 9.7 percent. Sissener Canopus, an absolute return long/ short equity fund founded by Norwegian household name Jan Petter Sissener, ended the first three quarters of 2023 in positive territory at 2.2 percent after advancing 4.1 percent in September alone. This follows an 8.1 percent advance during the difficult market conditions of 2022. Tidan Fund, which employs a capital structure relative value strategy, enjoyed its best month on record with a return of 3.8 percent after a challenging inception-to-date journey.

Top NHX ELO Performers

In September, HedgeNordic introduced a new sub-strategy category to the Nordic Hedge Index: Equity Long-Only (ELO). This category is home to funds that would fall short of qualifying as a hedge fund due to their long-only trading approach but exhibit habitual characteristics of a hedge fund strategy (e.g., leverage and derivatives usage, portfolio concentration, fee structure, a spin-off of a long/short strategy, and absolute return objectives, among others). 

In September, the 11 constituents of the Equity Long-Only category experienced an average loss of 3.8 percent. Despite two consecutive months of losses, the group achieved an estimated gain of 12.8 percent during the first three quarters of 2023, driven by strong performance from concentrated equity funds such as HCP Focus, Asilo Argo and Solerstein Capital. Systematic value-focused fund HCP Quant performed best in this group in September with an advance of 3.3 percent, which brought the fund’s performance for the first nine months of 2023 to 16.8 percent.

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