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Nordea’s European Rates Opportunity Fund Turns Five

Report: Systematic Strategies

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Stockholm (HedgeNordic) – Nordea Asset Management is celebrating the five-year anniversary of its European-focused relative value fixed-income hedge fund, Nordea European Rates Opportunity Fund, this June. A standout performer in the Nordic fixed-income hedge fund space in 2022 with a return exceeding 10 percent, Nordea European Rates Opportunity Fund has delivered an annualized return of 7.5 percent over its five-year journey.

Managed by Nordea Asset Management’s Fixed Income Rates Team, Nordea European Rates Opportunity Fund seeks to capture alpha from relative value opportunities within the universe of European covered bonds rather than relying on directional positions. Despite covered bonds being perceived as a safe asset class, there are ample alpha opportunities in this highly liquid yet underinvested and inefficient market, according to Henrik Stille, Lead Portfolio Manager of NAM’s European Rates Opportunity Fund and NAM’s European Covered Bond strategies.

“Exploring attractive spread opportunities is our key expertise and has been the essential driver of alpha for many years.”

Henrik Stille, Lead Portfolio Manager of NAM’s European Rates Opportunity Fund.

“At Nordea Asset Management, we’ve shaped an innovative strategy to generate absolute returns with a unique stance: staying at the highest level of the credit ladder with an active, high-conviction and leveraged approach,” says Henrik Stille, part of Nordea Asset Management’s Fixed Income Rates team overseeing €40 billion in assets under management as of the end of 2023. “Exploring attractive spread opportunities is our key expertise and has been the essential driver of alpha for many years.”

Despite experiencing a more challenging June this year, Nordea European Rates Opportunity Fund has returned 9.4 percent year-to-date and delivered an annualized return of 7.5 percent since inception without any negative years so far. The fund has grown to oversee €308 million in assets under management. Building on the success of the European Rates Opportunity Fund, the team recently launched a UCITS-compliant fund that applies a similar approach.

The recently launched Global Rates Opportunity Fund complements Nordea’s lineup in the relative value fixed-income space, which also includes a fund with a strong emphasis on Nordic covered bonds, the Nordic Rates Opportunity Fund. The Nordics-focused fund achieved a return of 10.9 percent in the first five months of 2024, following a 10.3 percent gain in 2023, and has delivered an annualized return of 4.8 percent since launching in late 2019.

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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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