Stockholm (HedgeNordic) – Atlas Global Macro, the theme-driven hedge fund launched and managed by Lars Tvede, is once again open to new investors after being closed since early 2022. The closure to new investments followed Russia’s full-scale invasion of Ukraine, which left the fund’s Russian investments practically worthless due to sanctions and asset freezes. Now, two years later, the Atlas Global Macro team has found a way to reopen the fund without diluting the existing investors’ share of the frozen Russian assets.

Prior to Russia’s full-scale invasion of Ukraine, Atlas Global Macro had built exposure to Russian securities as part of its “commodity supercycle” strategy. Following the invasion, foreign investors faced asset freezes due to Western sanctions and Russian countermeasures, rendering Atlas Global Macro’s exposure to Russian securities effectively worthless. Consequently, the fund was closed to new subscriptions and redemptions to protect existing investors from dilution. Now, Atlas Global Macro has reopened again to new investments.

“After Russia’s invasion of Ukraine, we were in discussion with the fund’s administrator on how to best handle the Russian-exposed assets,” explains Lars Tvede. “At that time, it was decided by the fund’s administrator that it was practically impossible to separate out the Russia-exposed assets in a so-called side pocket due to the fund’s very large investor base,” he continues. To protect existing investors’ stake in the hedge fund’s Russian-exposed assets, the original fund remains closed to new clients and investments. However, a newly established fund offers the same exposure – minus the Russian assets – allowing new investors to join.

“On the one hand, the transfer allows the fund to be reopened to new investors…”

The reopening has been made possible by transferring fund administration from Credit Suisse to UBS. “On the one hand, the transfer allows the fund to be reopened to new investors, which over time will reduce the administration costs for the existing investors, as these costs will be spread over a larger asset base,” says Tvede. Additionally, the new UBS trading setup offers more efficient access to commodity trading through futures, which is significantly more cost-effective than the ETFs and ETCs the fund was limited to under the Credit Suisse arrangement.

“Running a fund closed to new investors is not sustainable in the long term.”

Tvede emphasizes that the fund’s longer-term viability hinged on reopening. “Running a fund closed to new investors is not sustainable in the long term,” notes Tvede. “A fund liquidation is typically costly, so it is in the interest of the existing investors that the fund was moved to UBS, where it has been reopened.”

Subpar Performance

Launched in May 2021, Atlas Global Macro follows a thematic global macro strategy by employing a long-term-oriented and directional approach. While the fund’s exposure to Russian assets impacted its performance, returns have been disappointing overall. After a 32.6 percent loss in 2022, the fund edged down 2.4 percent in 2023 and edged up 1.8 percent so far in 2024 through the end of September, translating to a cumulative loss of 41 percent since inception. “The performance is obviously not satisfactory,” admits Tvede.

“Our strategy has from the start had a strong focus on the start of a new commodity cycle, since there have been far too little capital investments in the industry to meet expected long-term demand.”

Much of the performance issues stem from the fund’s bet on an expected commodity cycle, which has yet to fully materialize. “Our strategy has from the start had a strong focus on the start of a new commodity cycle, since there have been far too little capital investments in the industry to meet expected long-term demand,” explains Tvede. However, two unexpected events hit the fund’s “commodity supercycle” theme hard. “The first was that our investments in Russian assets – which stood to benefit from this – were frozen and written down to zero,” he starts. “And second by the Chinese slowdown, which authorities for a long time failed to do much about.”

Despite these setbacks, Tvede and his team remain confident that a commodity cycle is still on the horizon. “A new commodity cycle is approaching and will be powerful,” says Tvede. According to Tvede, “AI will demand a lot of energy, renewables will demand a lot of metals, and a nuclear revival will demand a lot of uranium.” In the shorter term, however, this theme “depends a lot on what happens in China, but recent policy events indicate that they have their eyes on the ball now,” says Tvede. 

In addition to their focus on commodities, the team is bullish on Vietnam, and ASEAN, and expects a softening U.S. dollar alongside falling inflation and interest rates in developed economies. Recently, the fund took positions in NASDAQ, U.S. homebuilders, and the Russell 2000, anticipating benefits from lower rates. “We are sticking to our long-term, value-driven approach and are excited to welcome new investors back to the fund,” Tvede concludes.