Change in Brummer Multi-Strategy
Brummer Multi-Strategy (BMS) is redeeming its entire investment in the fund Nektar by 31 May 2019. The portfolio managers continuously evaluate the funds that BMS is invested in at the same time as work on identifying and evaluating new fund teams progresses. The purpose of all investment decisions is to improve BMS and its conditions to be able to generate a strong, risk-adjusted return, which over time has a low correlation to equities and bonds. The assessment by the managers now is that Nektar's expected future contribution to BMS's risk-adjusted return is no longer competitive enough and therefore choose to redeem its entire holding in the fund.
Nektar is a hedge fund focused on fixed income and foreign exchange markets and whose positions are taken on the basis of relative valuation and macroeconomic views. BMS has invested in Nektar since its launch in April 2002 and the fund has delivered a strong return and solid diversification. The financial environment for a hedge fund strategy like Nektar’s has, however, been challenging in recent years and the fund has not succeeded in delivering a competitive return. Nektar's weight in BMS was at its highest in June 2016 and has been reduced since then, especially in 2019.
Nektar, Sweden's yet oldest hedge fund, started in 1998 and has had an average annual return of over 9 per cent (to March 2019 inclusive) on non-existent correlation with the stock and bond markets.
"Nektar has been a pillar of BMS from the outset and its risk-adjusted contribution has been strong over time. Recent years have been a challenging financial environment for Nektar's strategy on account of low interest rates and the extreme pricing of volatility. The future prospects are also difficult to assess. Recently we have had a constructive dialogue with Nektar but have now made the decision to redeem the entire investment in Nektar. We invest in funds with the intention of long term commitments, so ending this investment is by all means sad after 17 years. But all investment decisions are meant to increase the value for long term strong risk-adjusted performance to BMS’s investors", says Mikael Spångberg, BMS's CEO and portfolio manager.
BMS will redeem its units in Nektar on 31 May 2019. Investors in the BMS funds need not take any action. Nektar's investors can either wait for a merger with BMS or redeem their units at the same time as BMS. More information about the merger and redemption is available here.
After the redemption in Nektar, BMS is invested in eight funds: AlphaCrest, Arete, Black-and-White, Bodenholm, Florin Court, Lynx, Manticore and Observatory.
CONTACT INFORMATION
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