Stockholm (HedgeNordic) – Two of Danske Bank’s fixed-income hedge funds were closed to new subscriptions at the end of March after approaching their maximum capacity. After several difficult months for fixed-income markets and strategies across the board, Danske Invest Hedge Fixed Income Strategies Fund and Danske Invest Hedge Fixed Income Relative Value Fund have been re-opened for new subscriptions.
“This closure was for an undetermined period of time. Since new capacity of investments is now existing, the Board has decided to reopen these Cells to new subscriptions and conversions in for all the share classes and for an undetermined period of time,” says a notice to investors.
“Since new capacity of investments is now existing, the Board has decided to reopen these Cells to new subscriptions and conversions in for all the share classes and for an undetermined period of time.”
Danske Invest Hedge Fixed Income Relative Value Fund and Danske Invest Hedge Fixed Income Strategies Fund were closed to new subscriptions or conversions in, except for their W classes solely available to a select group of clients in the context of a discretionary management agreement. Both funds had previously been subject to a five percent subscription fee, “which in theory has kept the two funds closed to new money for years,” according to Michael Petry, Head of Hedge Funds at Danske Bank Asset Management. After years of not taking new money to protect existing clients’ investments, the funds are now open to new investments.
Danske Invest Hedge Fixed Income Strategies Fund, which seeks to capture imbalances in fixed-income markets by taking long and short positions in traditional government bonds, mortgage bonds and financial derivative instruments, has seen its assets under management decline to DKK 5.6 billion from DKK 6.7 billion at the end of March. The fund managed by Michael Petry is down about 22 percent over the first three quarters of 2022 after booking a loss of 6.3 percent in September, when elevated uncertainty and fear of an escalating war had a severe impact on market liquidity in fixed-income markets.
2022 is only the second time that returns have been negative for Danske Invest Hedge Fixed Income Strategies since launching in 2005. Michael Petry’s fund was down a similar 21 percent back in 2008, after which the fund went on to generate an annualized return of 29 percent over the next five years. Danske Invest Hedge Fixed Income Strategies has generated an annualized return of 8.6 percent since early 2005 through the end of September this year despite a challenging 2022 so far.
This year’s challenging market environment had a more significant impact on the performance of the second fund, Danske Invest Fixed Income Relative Value. Down 26.3 percent in the first nine months of 2022, the fund has seen its asset under management drop to DKK 2.4 billion from over DKK 4 billion in late 2021 and DKK 3.5 billion at the end of March this year.
