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Chelonia to Embrace Long-Biased Strategy

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Stockholm (HedgeNordic) – Despite securing a spot among the top 15 best-performing Nordic hedge funds this year as a market-neutral fund, Chelonia Market Neutral is changing its strategy to adopt a more net long-biased approach. With this transition, which mandates a net market exposure of at least 20 percent, the fund is rebranding itself as Chelonia Select.

“The biggest difference compared to the prevailing structure is that the fund is given more room to be more long-biased, which involves more flexibility to hold a larger proportion of long positions compared to short ones,” explains portfolio manager Magnus Angenfelt. “The purpose of the reshuffling is to invest in shares we believe in for the long term without the need to hedge market risk or use short pairs against long positions,” he elaborates. Angenfelt relies on a deep fundamental approach, with valuation being his primary selection criteria.

“The biggest difference compared to the prevailing structure is that the fund is given more room to be more long-biased, which involves more flexibility to hold a larger proportion of long positions compared to short ones.”

Magnus Angenfelt, portfolio manager of Chelonia Select.

After weathering two years of single-digit losses, the formerly named Chelonia Market Neutral advanced 15 percent in the first five months of 2024, securing a place among the top 15 best-performing Nordic hedge funds. From June onward, the newly named Chelonia Select will adopt a more long-biased net exposure. “Over time, we expect to be able to deliver a higher return than before,” notes Angenfelt. “The change, however, comes at the cost of the fund moving a little more in tune with the stock market, both on the upside and downside,” he adds. “But we believe that a greater proportion of corporate bonds and the continued focus on identifying and shorting overvalued and mis-priced stocks will provide risk diversification and mitigate volatility compared to a typical equity fund.”

“Over time, we expect to be able to deliver a higher return than before.”

Magnus Angenfelt, portfolio manager of Chelonia Select.

Despite the strategic shift, there will not be an immediate significant change in net exposure and the investment portfolio, given Angenfelt’s current market outlook. “There will initially be no major turnaround,” says Angenfelt. “After the stock exchange surged over 30 percent in the last half year, it is not the right time to increase net exposure dramatically.” Chelonia Select ended the month of May with a net exposure of 26 percent.

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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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