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Hedge funds holding up well in Sweden

Sweden’s hedge fund managers have a friend in their financial markets minister, who stood up for them earlier this month. And the sector remains fairly upbeat about its prospects this year in spite of recent problems.

Financial markets minister Matts Odell cautioned European legislators against “overzealous” regulation of hedge funds and private equity firms, stressing they should not be viewed as a primary cause of the global financial crisis.

“In some countries, the political debate portrays private equity and hedge funds as the problem. That’s not the same as saying we shouldn’t regulate them. But the aim is to have sound regulation and not to kill the industry,” he said.

The Swedish hedge funds market is now worth some SKr60bn spread across around 45 funds, with the market split between a small number of large funds and a lot of smaller ones, explains Philip Rydén, director at fund of funds Harcourt, which established Sweden’s first hedge fund index.

“Performance was down in 2008 by 3.5% and some assets have clearly declined during 2009. For the future it is hard to say whether we have reached the bottom, but it does look like it,” he says.

“There have not been too many funds shutting down, perhaps one or two. Pretty much all of them are left,” he adds.

With much hiring activity done through word-of-mouth or discreetly by headhunters, it is hard to gauge demand within the sector. “But at the moment it feels fairly static,” Rydén says.

Against a tough economic backdrop, Stockholm hedge fund Brummer & Partners has continued to expand, says chief compliance officer Joakim Schaaf.

“Considering the market as a whole, things have been going well. We have launched two new funds in the past six months, one in Sweden and one in Singapore, with good results,” he says.

“We might very well consider a new recruitment campaign in the autumn. But we are also always on the look-out for people to add to our management teams, particularly if they can help us to diversify the portfolio or the catalogue of funds,” he adds.

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