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Market-Neutral Healthcare Fund Ends Nearly Two-Decade Run

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Stockholm (HedgeNordic) – One of Norway’s longest-running hedge funds, the market-neutral Sector Healthcare Fund, is winding down after nearly 19 years of operation. The fund’s investment team is refocusing its efforts exclusively on managing the long-only equity fund, Sector Healthcare Value Fund.

“The investment manager has come to the difficult decision to close the hedge fund strategy and to focus solely on managing the absolute return focused, long only Sector Healthcare Value Fund,” writes the team behind Sector Gamma, the healthcare specialist manager on Sector Asset Management’s fund platform. The team, led by Trond Horneland, cites below-target recent returns and a relatively small asset base as key factors contributing to this decision. They also express enthusiasm about redirecting both internal capital and full attention to the long-only, absolute return-focused fund, which they view as offering “an attractive opportunity set for valuation based on long-only healthcare investing.” The long-only fund, Sector Healthcare Value Fund, oversees close to $423 million in assets under management as of early June 2024.

“The investment manager has come to the difficult decision to close the hedge fund strategy and to focus solely on managing the absolute return focused, long only Sector Healthcare Value Fund.”

Established in the fall of 2005, Sector Healthcare Fund operated as an equity market-neutral fund with a focus on the global healthcare sector. Over its nearly 19 years of operation, the fund achieved an annualized return of 4.9 percent with a standard deviation of 4.3 percent and a market beta close to zero. “The fund has naturally had its ups and downs, in its long history,” says the team at Sector Gamma, highlighting the “tendency to do well in periods of general market stress.” While the fund experienced periods of strong performance, notably during the 2008-2009 financial crisis and the selloff in 2014-2015, its recent performance has been subdued.

“We want to thank our investors, our counterparties and all the people in the Sector who were instrumental in launching, managing and now closing this Fund.”

Over the past decade, the fund delivered an annualized return of 1.8 percent, with challenges exacerbated during the COVID-19 pandemic, leading to a combined loss of 11.3 percent in 2020 and 2021. The fund had positive but below-target returns from the beginning of 2022 until its closure in May this year. “We want to thank our investors, our counterparties and all the people in the Sector who were instrumental in launching, managing and now closing this Fund,” concludes the Sector Gamma team.

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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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