Stockholm (HedgeNordic) – A former billion-dollar hedge fund from the Nordics is reaching its final chapter amid “diminished demand for hedge funds with a low-risk focus” in Sweden. Case Hedgefond, a multi-strategy hedge fund managing just over €100 million as of mid-year, is set to merge into Case Fonder’s credit hedge fund, Case Credit Opportunity.
“In connection with a review and consolidation of our fund offering, the board has decided to merge Case Hedgefond with Case Credit Opportunity,” announces the team at Case Fonder. CEO Johan Andrassy (pictured) explains that “in the current financial landscape, Sweden is experiencing a diminished demand for hedge funds with a low-risk focus.” Andrassy sees this shift as “a strategic opportunity to consolidate resources and enhance the value proposition for investors by merging a hedge fund predominantly invested in fixed-income securities with a credit hedge fund that has a complementary focus.”
“In the current financial landscape, Sweden is experiencing a diminished demand for hedge funds with a low-risk focus.”
Johan Andrassy, CEO of Case Fonder.
Launched in early 2004 by Catella, Case Hedgefond has historically blended long/short equity and fixed-income investing to achieve low-risk and attractive risk-adjusted returns. While the fixed-income strategy has remained broadly unchanged in recent years, the long/short equity segment has undergone multiple transformations. Following a period of up and down performance from 2016 to 2021, Case Hedgefond found its footing with Fredric Calles, Head of Hedge Funds at Case, leading the equity strategy. The fund achieved a 5.1 percent return in the challenging market conditions of 2022 and repeated this performance in 2023. The multi-strategy hedge fund gained an additional 1.6 percent in the first half of 2024.
Despite a turnaround in performance, Case Hedgefond’s assets under management continued to decline, falling from over SEK 2 billion at the end of 2021 to under SEK 1.2 billion by mid-2024. Previously known as Catella Hedgefond, the fund once managed more than SEK 15 billion in assets during 2015 and 2016. Case Hedgefond is now set to merge with Case Credit Opportunity, a Swedish special fund that employs a flexible approach to investing in both investment-grade and high-yield bonds. “In an environment where low-risk hedge funds face weak demand, a merged fund with a broader and more dynamic investment strategy can appeal to a wider range of investors,” considers Andrassy, CEO of Case Fonder. “By offering a compelling value proposition that combines stability with enhanced return potential, the merged fund can attract both existing and new investors, thereby strengthening its market position.”
“The synergies created from merging expertise, research capabilities, and market insights can enhance the overall performance of the combined fund.”
Johan Andrassy, CEO of Case Fonder.
Andrassy highlights that a merger can streamline operations, reduce administrative and management costs, and eliminate redundancies. “The economies of scale achieved through the consolidation can lead to lower operational expenses, which in the future can be passed on to investors in the form of lower fees, thus making the fund more attractive in a competitive market,” he elaborates. More importantly, Andrassy argues that “the synergies created from merging expertise, research capabilities, and market insights can enhance the overall performance of the combined fund.” At the same time, “a more robust and well-resourced investment team can better identify and exploit market inefficiencies, leading to improved returns.”
Case Credit Opportunity Becoming More Flexible
With Case Credit Opportunity managing a smaller asset base of about SEK 400 million compared to Case Hedgefond’s SEK 1.2 billion, the team at Case Fonder argues that combining the two funds allows for a broader spectrum of fixed-income and credit instruments, thereby enhancing diversification. “This diversified portfolio can better mitigate risks and capture opportunities across various segments of the credit market,” says Andrassy. “By leveraging the complementary investment strategies and risk management practices of both funds, the merged entity can offer a more resilient investment vehicle, capable of navigating different market conditions effectively.”
“In summary, merging a hedge fund focused on fixed-income securities with a credit hedge fund creates a more robust, efficient, and attractive investment vehicle.”
Johan Andrassy, CEO of Case Fonder.
“In summary, merging a hedge fund focused on fixed-income securities with a credit hedge fund creates a more robust, efficient, and attractive investment vehicle,” concludes Andrassy. The decision to merge Case Hedgefond not only addresses the current market challenges in attracting assets to low-risk products but also lays the groundwork for sustainable growth and greater value for investors, according to Andrassy.
