Stockholm (HedgeNordic) – After a promising start to the second half of the year in July, Nordic hedge funds dipped by 0.1 percent in August. This decline came amid a challenging month for trend-following CTAs, while fixed-income managers had a solid performance. For the first eight months of 2023, the Nordic hedge fund industry has seen a 2.3 percent increase in returns.

Only two of the five strategy categories within the Nordic Hedge Index registered positive returns in August. Fixed-income hedge funds have been enjoying a robust recovery throughout 2023 after a difficult 2022, with a 6.0 percent increase as a group following a 0.9 percent advance in August. Multi-manager vehicles in the region edged up 0.2 percent in August, ending the first eight months of 2023 with a positive return of 1.7 percent. Nordic CTAs, on the other hand, booked an average decline of 1.8 percent in August amid several intra-month trend reversals across markets. Equity and diversified hedge funds also experienced minor setbacks, with declines of 0.4 percent and 0.3 percent, respectively, during the month of August.

This month, HedgeNordic introduced a new sub-strategy category to the Nordic Hedge Index: Equity Long-Only (ELO). This category is home to funds that would fall short of qualifying as a hedge fund due to their long-only trading approach but exhibit habitual characteristics of a hedge fund strategy (e.g., leverage and derivatives usage, portfolio concentration, fee structure, a spin-off of a long/short strategy, and absolute return objectives, among others). Although the constituents of the “Equity Long-Only (ELO)” category will not be part of the NHX Composite index, the new strategy sub-index will be its own category at the Nordic Hedge Award.

In August, the 11 constituents of the Equity Long-Only category experienced an average loss of 2.7 percent. However, the group has achieved an estimated gain of 16.0 percent during the first eight months of 2023, driven by strong performance from concentrated equity funds such as HCP Focus, Asilo Argo, and Solarstein Capital.

The performance dispersion between the best- and worst-performing members of the Nordic Hedge Index declined slightly month-over-month. In August, the top 20 percent of Nordic hedge funds gained 2.6 percent and the bottom 20 percent lost 3.5 percent, resulting in a top-to-bottom dispersion of 6.1 percent versus 6.6 percent in July. In July, the top 20 percent were up 4.6 percent on average and the bottom 20 percent were down 1.9 percent. A little more than half of the members of the Nordic Hedge Index with reported August figures posted gains for the month.

Top Performers in August

Oslo-based energy-focused long/short equity fund OAM Absolute Return emerged as the top performer in the Nordic Hedge Index in August and year-to-date. After gaining 8.8 percent in August with solid contributions from both its long and short positions, the fund managed by Harald James Otterhaug gained 27.4 percent over the first eight months of 2023. This year’s return follows gains of 27.5 percent in 2022, 45.1. percent in 2021 and 50.1 percent in 2020. This solid performance reflects a strong rebound in performance from a drawdown of about 50 percent that peaked in 2019.

Coeli Global Opportunities, a long/short equity fund run by Andreas Brock and Henrik Milton, also enjoyed a solid performance both in August and the first eight months of 2023. The fund gained 6.1 percent in August and achieved a return of 24.8 percent year-to-date. After a difficult first half of 2023, equity-focused opportunistic fund Pensum Global Opportunities gained 4.5 percent in August to trim the year-to-date decline to 16 percent. 

Capital Four Structured Credit Opportunities ended August with a 3.6 percent gain, propelling the fund into the list of the top ten best-performing Nordic hedge funds in 2023, with a return of 16.4 percent. Nordea 1 – Alpha 15 MA, one of the three funds in Nordea Asset Management’s Alpha family that seeks to capture risk-on and risk-off risk premia, gained 3.5 percent in August. The fund edged down 0.9 percent over the first eight months of 2023.

The Month in Review for August 2023 can be downloaded below: