“Macro is back and matters.” The phrase has become a recurring headline in financial media. Macro is back and so is the ability to deliver strong returns for fixed-income macro managers such as Nordkinn Asset Management. With five portfolio managers based in Oslo and Stockholm, Nordkinn has captured the renewed relevance of macro-driven investing, delivering an annualized return of 9.1 percent over the past three years.

“The trains are leaving the stations constantly rather than sporadically as before,” says Chief Economist and portfolio manager Bjørn Roger Wilhelmsen. “Even if we miss one train, there’s always another one coming.” For Nordkinn, those trains represent the constant flow of macro-driven opportunities that have returned to fixed-income markets after a decade of dormancy.

“The trains are leaving the stations constantly rather than sporadically as before. Even if we miss one train, there’s always another one coming.”

Bjørn Roger Wilhelmsen, Chief Economist and portfolio manager at Nordkinn Asset Management.

From a Decade of Suppression to a Return of Macro

Nordkinn Fixed Income Macro Fund was launched in mid-2013, at the height of an era dominated by central bank intervention. “When we launched the fund, we entered a period that was quite special,” recalls Wilhelmsen. “We had essentially zero interest rates and large-scale quantitative easing to suppress long-term yields.” Central banks became price-insensitive buyers, compressing term premiums and damping volatility across fixed-income markets.

“Even if you had positive macro surprises, there was a long time before any rate hikes were on the horizon. The data didn’t move expected rates much.”

Bjørn Roger Wilhelmsen, Chief Economist and portfolio manager at Nordkinn Asset Management.

“We had a period where macro by and large didn’t matter,” he continues. “Even if you had positive macro surprises, there was a long time before any rate hikes were on the horizon. The data didn’t move expected rates much.” Those years created a difficult environment for macro investors, one in which economic data had little bearing on asset prices.

A New Market Cycle

That has changed completely. “The macro environment is now fundamentally different,” says Wilhelmsen. “Without QE, markets must absorb more duration risk, and bond yields have become much more sensitive to inflation, growth, and fiscal developments.” As central banks stepped back, the link between macro data and market pricing returned, bringing volatility and opportunity back with it. “We now have a higher-volatility environment, and that means opportunities appear more frequently.”

Lars Mouland, an experienced fixed-income professional who joined Nordkinn in the summer after seven years as Chief Rates Strategist at Nordea, more than a decade managing KLP’s fixed-income hedge fund, and an additional ten years at Storebrand, agrees that the zero-interest-rate era was a highly unusual period in hindsight. “That interest rates are higher now than they were before the pandemic helps,” says Mouland. “Higher rates almost always mean more volatility in the rates space.” 

“We’re certainly not snapping back to the pre-pandemic market anytime soon.”

Lars Mouland, Portfolio Manager at Nordkinn Asset Management.

He also highlights the return of inflation after four decades of dormancy. “From 2009 to 2020, nobody cared about inflation, it simply wasn’t an issue. Now it’s a different ball game,” says Mouland. “We were likely heading toward higher inflation even without the massive stimulus during COVID, but that fiscal response acted as a powerful kickstarter.” He notes that large-scale government spending has remained a defining feature of the post-pandemic landscape. According to Mouland, the current environment is more a case of moving from a sluggish, drawn-out period to a far more active one, and economies have clearly benefited from that huge fiscal push. “We’re certainly not snapping back to the pre-pandemic market anytime soon.”

Building the Portfolio Around Themes

Nordkinn structures its portfolio around five to eight investment themes, each representing a macro view expressed through multiple positions. “If, for example, we believe the Swedish central bank will cut rates, that theme may include cross-market spreads, directional positions, and curve steepeners that benefit from a lower policy rate,” explains Wilhelmsen.

The process of theme generation and monitoring is highly structured. “We have weekly top-down meetings focused on the global and Nordic macro environment,” says Wilhelmsen. “All portfolio managers share their assessments of growth, inflation, and monetary policy. Then we have a separate bottom-up meeting where we review every existing theme and every trade in detail, reassessing their relevance in light of new information.” This rhythm ensures that the portfolio remains dynamic and responsive. “The macro backdrop is changing constantly, and our process allows us to adjust in real time.”

Diversification and Risk Management

Each theme typically contains five to ten positions expressed through a range of instruments, from cash bonds and derivatives to FX and rate exposures. “We aim to keep the positions within a theme fairly correlated, as they all express the same macro view, but we use different instruments and timing to capture it,” says Mouland.

Correlation is closely monitored both within and across themes to ensure genuine diversification. “It’s no use having two themes that are effectively expressing the same view,” notes Mouland. “You might think you’re diversified, but you’re not. We want each theme to stand on its own and be as uncorrelated as possible with the others.”

“We want each theme to stand on its own and be as uncorrelated as possible with the others.”

Lars Mouland, Portfolio Manager at Nordkinn Asset Management.

That independence between themes is critical for risk management. “For us it is essential that we have a strong risk system where we measure risk dimensions such as correlations constantly, both within and across themes,” explains Wilhelmsen. “Under stress, correlations tend to rise sharply or even change sign, so we measure them over short time spans to capture what happens when volatility spikes.”

Conviction, Flexibility, and Speed

Portfolio allocation depends on the team’s level of conviction in each idea. “We have a conviction scoring system for each trade, ranked from one to four, with one being the highest conviction and four the lowest,” explains Wilhelmsen. “To keep the portfolio flexible and ensure we can act quickly, each investment manager is allowed to initiate a low-conviction trade, a level-four position, without seeking prior approval.”

This structure allows Nordkinn to respond swiftly to new opportunities while maintaining discipline through collaboration. “It’s a way to test new ideas in small size,” says Wilhelmsen. “If a trade gains support within the team and conviction grows, we can then scale the position gradually toward a conviction-one trade,” he adds. “It gives us both speed and structure: flexibility when needed, but also a clear process for building confidence and size in our positions.”

True diversification within Nordkinn’s portfolio also stems from its physical presence in both Oslo and Stockholm. While the Nordic region may appear homogeneous from the outside, local economies, markets, and central banks often behave differently and understanding those nuances requires local expertise. “When we established the company in late 2012, we immediately opened two offices, one in Stockholm and one in Oslo, and being physically located in these two markets is essential for our strategy,” says Wilhelmsen. “Our team consists of fixed-income and FX specialists with backgrounds in asset management, investment banking, and central banking, which gives us a broad and complementary skill set.”

“The advantage of being present in both markets is that we can stay close to local developments such as flows and policy decisions.”

Bjørn Roger Wilhelmsen, Chief Economist and portfolio manager at Nordkinn Asset Management.

Having teams on both sides of the border enhances perspective and market awareness. “The advantage of being present in both markets is that we can stay close to local developments such as flows and policy decisions,” he adds. “Norway and Sweden are small open economies closely linked to global trends, but their central banks often differ in timing and magnitude of policy moves.”

A True Diversifier in Investor Portfolios

Nordkinn Fixed Income Macro Fund seeks to serve as a genuine diversifier in an investor’s portfolio. Part of this stems from its fully discretionary investment approach. “One of our key advantages is that we are entirely discretionary in our process,” says Mouland. “We don’t follow a predefined strategy that tells us to be long credit or long duration; we adapt to the opportunities the market presents.”

“Our performance is very uncorrelated with other beta sources, which means we can add genuine diversification to investors’ portfolios.”

Lars Mouland, Portfolio Manager at Nordkinn Asset Management.

This flexibility allows the fund to consistently generate returns that behave differently from most fixed-income exposures. “Our performance is very uncorrelated with other beta sources, which means we can add genuine diversification to investors’ portfolios,” Mouland explains. That quality distinguishes Nordkinn from many of its peers. “A lot of fixed-income funds tend to focus primarily on credit, which gives them higher beta to credit or equity markets,” he adds. “We’re different; our returns are driven by macro themes rather than credit spreads.”