Like any other financial ecosystem, the Nordic hedge fund industry comprises a wide range of stakeholders — from fund managers and their investors to service providers. Each of these players may view the current state and trajectory of the industry through a different lens. However, few have a more close-up view of developments than Jonathan Holm and Fredrik Beyer of SEB, who head the bank’s Prime Brokerage Services and Prime Finance Sales & Origination, respectively. Interacting with Nordic hedge and international fund managers on a near-daily basis, they are well-positioned to observe emerging trends, structural changes, and the evolving needs of managers and allocators alike.
The Roots
“The core of what we do at SEB dates back to the late ’80s or early ’90s,” says Fredrik Beyer. “Brummer’s success with its hedge fund strategies played a pioneering role in developing the hedge fund industry here.” Initially, SEB provided basic services such as stock lending, but as the hedge fund ecosystem matured, so did SEB’s capabilities. “We evolved from simple stock loans to more tailored financing transactions, and today we act as the prime broker for most of the Nordic equity-based hedge funds.”
“Brummer’s success with its hedge fund strategies played a pioneering role in developing the hedge fund industry here.”
Fredrik Beyer, Head of Prime Finance Sales & Origination at SEB.
While SEB’s prime brokerage offering spans multiple asset classes, the core focus remains on equity strategies, particularly long/short equity. On a day-to-day basis, Beyer and his team facilitate short exposure for clients either through traditional stock lending or synthetic structures. “SEB provides leverage to clients through stock loans, cash lending against equity collateral or synthetically through equity swap,” he explains
Beyer focuses on pre-trade activities, including pricing and structuring, while Jonathan Holm’s team handles post-trade operations. “We’re responsible for the delivery of the exposure – whether through stock loans or derivatives like swaps – and activities related to custody, collateral, and financing,” explains Holm. “We also provide a whole other set of services that essentially help manager be efficient with their trading.” Both Beyer and Holm sit within SEB’s equities organization and are in close contact with managers, both across the region, as well as internationally, getting valuable insight into the evolving Nordic hedge fund universe.
The Evolution of the Industry
Fredrik Beyer credits Brummer & Partners with laying the foundations of the Nordic hedge fund industry. “Brummer’s early success helped position the Nordics, particularly Sweden, as a breeding ground for alternative investment managers,” says Beyer. “We were punching above our weight in terms of the number and quality of hedge funds emerging from the region,” he adds. “There was a wave of startups – some succeeded, others didn’t, as is the case in any evolving market – but that initial momentum really set the tone for the development of the industry here.”
Over the past two decades, Beyer has observed a marked evolution in the Nordic hedge fund industry, noting its significant maturation and institutionalization. “Twenty years ago, you could launch a hedge fund with SEK 100 million and a Bloomberg terminal,” he says. “If you were a skilled trader or analyst, you had a real shot at building a successful franchise.” Today, the path to success looks quite different. “The industry has become more institutionalized. What used to be a dynamic, entrepreneurial space now operates more like any other institutional business.”
“Twenty years ago, you could launch a hedge fund with SEK 100 million and a Bloomberg terminal. The industry has become more institutionalized.”
Fredrik Beyer, Head of Prime Finance Sales & Origination at SEB.
One consequence of this shift has been an increase in the regulatory burden and operational complexity. “Compliance, legal, and risk management requirements have raised the barriers to entry for new entrants,” notes Beyer. “That has reduced the number of startups, not just in Sweden, but globally.” Beyer points to the growing difficulty of building a successful hedge fund and scaling it into an institutional business. “It has become increasingly challenging worldwide to start and grow a hedge fund,” he says. “At the same time, the war for talent is intensifying, with large firms aggressively recruiting top performers – whether they’re coming from banks or rival hedge funds – by offering highly competitive terms.”
Norway Steps Into the Spotlight
While Sweden has long been the epicenter of the Nordic hedge fund world, Holm sees a growing level of activity and innovation in Norway. “We’re seeing more successful launches coming out of Norway,” he observes. One potential reason is a tendency toward specialization among Norwegian managers. “It’s tough to launch a generalist long/short equity fund and stand out. Norwegian managers often carve out a niche or find a specific angle that makes them more marketable and differentiated,” says Holm.
The Rise of Managed Accounts
Another trend gaining traction in the Nordics – albeit more slowly than in the U.S. and U.K. – is the use of separately managed accounts (SMAs). “Many institutional investors are increasingly exploring and using managed account structures,” says Holm. “It’s important for the Nordic hedge fund community to be open to that kind of solution.”
“Many institutional investors are increasingly exploring and using managed account structures. It’s important for the Nordic hedge fund community to be open to that kind of solution.”
Jonathan Holm, Head of Prime Brokerage Services at SEB.
Beyer notes that while hedge fund startups in London may still raise capital for their commingled funds, many also receive substantial allocations through managed accounts – sometimes as high as $100 million – from both institutional investors and some of the largest hedge funds in the world. “These firms are constantly looking for ways to deploy capital, and managed accounts are a big part of that.”
Historically, managers were reluctant to accept managed accounts due to operational complexity and the difficulty of splitting trades, among other things. “But today, it’s not that complicated. Operational hurdles have come down, and most managers can handle the infrastructure,” says Beyer. That has lowered the barrier to entry for SMAs and opened up new fundraising avenues. “I also think many institutional investors increasingly see the advantages of investing through managed accounts,” notes Beyer.
Holm underscores the importance of adapting to investor demands. “If the issue is attracting capital, then managers need to listen to what investors are asking for and SMAs are one answer,” says Holm. “It’s likely to become a more prominent model here, and it’s key to sustaining a growing hedge fund community in the Nordics.”
Going Niche: The Nordic Edge
With global hedge fund giants becoming increasingly dominant – with deeper resources, talent pools, and global scale – Nordic managers may need to lean into their natural strengths. “In the U.S., a new manager might aspire to become the next Tier 1 hedge fund. But here, success is more likely to come from carving out a niche,” says Beyer. “Whether it’s Nordic small- and mid-cap equities, energy, or another specialized area, the managers that have done well here tend to focus narrowly and execute extremely well.”
“In the U.S., a new manager might aspire to become the next Tier 1 hedge fund. But here, success is more likely to come from carving out a niche.”
Fredrik Beyer, Head of Prime Finance Sales & Origination at SEB.
“That’s more in line with the Nordic mindset, we’re not out to conquer the world in the same way. Instead, it’s about demonstrating real expertise in a specific area,” concludes Beyer. “If you can do that successfully, you can become a compelling, complementary component in investors’ portfolios.”
This article is part of HedgeNordic’s “Nordic Hedge Fund Industry Report.”
