Usually operating under the radar, Norwegian long/short equity vehicle Taiga Fund delivered one of its strongest first-half performances to date – its best since 2019 and third-best overall – posting a gain of 13.3 percent over the first six months of 2025. The fund delivered positive returns in five out of six months, helped by limited exposure to global trade and a strong focus on Nordic economies, alongside solid earnings growth in its portfolio companies. With a 13.3 percent gain in the first half, Taiga Fund ranks among the ten best-performing Nordic hedge funds so far this year.
Reflecting on the first half of 2025, the investment team at Taiga Fund, led by co-manager Ola Wessel-Aas and Andreas Petterøe, notes that “in a quarter characterised by trade tensions and geopolitical unrest, the positive market returns leave an impression of surprising resilience.” Despite market turmoil in early April, both global and European equity indices reached new all-time highs by the end of the second quarter. Nordic markets, however, delivered relatively modest gains and remain below previous peaks. Still, Taiga Fund achieved a strong first-half performance, outperforming its regional backdrop.
The fund’s first-half performance was driven by its tilt toward domestic Nordic businesses rather than globally exposed companies. “We continue to favour Nordic end-market exposure as more globally exposed companies face challenges from tariffs and adverse currency movements,” comments the team behind the $189 million fund. “Meanwhile, domestic demand across the region is expected to benefit from solid public finances, increased spending on defence and infrastructure, and a revival in private consumption.”
“We continue to favour Nordic end-market exposure as more globally exposed companies face challenges from tariffs and adverse currency movements.”
With the exception of Norway, all Nordic countries have implemented multiple rate cuts over the past year. The Norwegian central bank followed suit with its first cut in May. “Many sectors that were severely hit by the steep rate hikes and cost of living crisis in 2022/2023 have only just started to respond to the easing in monetary policy and more benign economic conditions with a return to real wage growth,” writes the team. “Interestingly, many names that stand to benefit from this recovery continue trade at moderate valuations despite significant upside to mid-cycle earnings.”
Grounded in a value-based fundamental approach, the team behind Taiga Fund has taken advantage of the current environment to build a more diversified long portfolio than usual. “We are not immune to good causes for near term equity market volatility, including from continued trade tensions,” the team acknowledges, “but remain reasonably confident that a positive earnings trajectory will win the day.”
“We are not immune to good causes for near term equity market volatility, including from continued trade tensions, but remain reasonably confident that a positive earnings trajectory will win the day.”
After capturing gains from its short book during the sell-off in early April, the team has since added to its short positions. “While we remain optimistic on the Nordic economies near term, we are witnessing mounting headwinds in sectors more exposed to global trade,” the team notes. The shipping sector, in particular, is cited as vulnerable due to substantial fleet expansion expected across several segments. This has opened up new short opportunities, and the Taiga team “have identified more short opportunities and have added to the short book lately.”
By the end of June, Taiga Fund held a gross exposure of 94 percent and a net exposure of 79 percent. “Total short exposure remains at a low level,” the team concludes. “While we will maintain a strong long bias, we do anticipate increased short activity in the months ahead.”
