Sweden’s oldest hedge fund is liquidating after 21 years, following a long period of difficult market conditions for its strategy and a redemption from its biggest investor.
Nektar Asset Management announced Thursday that it will liquidate its Nektar fund at the end of May. The firm said in a statement that it decided to wind down the fund after its largest investor, Stockholm-based asset manager Brummer & Partners, said it planned to redeem all its shares at the end of the month. Nektar also cited a tough market environment as a reason for closing its doors, the announcement stated.
Nektar is not the only hedge fund that has struggled in a difficult environment for active managers and hedge funds in particular. Asset allocators have been pulling their capital from hedge funds for four straight quarters, with outflows reaching $17.8 billion during the first three months of 2019, according to figures from Hedge Fund Research, a data provider.
“The decision is ultimately a consequence of a continued challenging environment for the fund's investment strategy,” said Patrik Olsson, chairman and chief investment officer of Nektar, in a statement. “Nektar's 21 years in operation have been an inspiring journey and this was an emotional, but right decision.”
As of March 31, Nektar had SEK 10 billion ($1.04 billion)in assets under management, its announcement said. The relative value macro fund, which trades in interest rate and foreign exchange markets, started in 1998 and had an average annual return of 9.1 percent since inception, according to an announcement published online Thursday by Brummer.
Brummer, which had invested in Nektar since 2002, said in that announcement that its allocation to Nektar was highest in June 2016 but has declined since then, especially in 2019.
[II Deep Dive: Hedge Funds Fail to Reverse Outflows Amid Big Rebound]
Investors can decide whether they want to redeem their shares in Nektar by the end of May, or if they want to wait to see if the Swedish government approves a merger between Brummer’s multi-strategy fund and the Nektar fund, the Nektar announcement said. If the deal is approved, the investors who remain invested in the Nektar fund will transfer to Brummer's multistrategy fund, so no taxable profit or loss will apply.
The firm said in its announcement that its portfolio has largely been de-risked. Management fees will be charged until May 15 or until the portfolio is completely discontinued, whichever occurs first, the announcement said.