Swedish hedge fund pioneer Brummer & Partners sees flagship strategy falter

Man in a maze

Brummer & Partners, the long-running Swedish multi-strategy hedge fund firm, is maintaining its market neutral approach and focus on diversification after its flagship strategy stumbled during the recent steep market sell-off. 

In a note to investors this week, founder Patrik Brummer and Mikael Spångberg, CEO and portfolio manager of the Brummer Multi-Strategy fund, said markets are set to be characterised by “great concern and high volatility” for some time.

Brummer Multi-Strategy, the firm’s flagship multi-strategy fund of funds vehicle, has fallen 3.5 per cent so far this month, and has now lost 3 per cent since the start of 2020.

“In this highly uncertain environment, we will continue to focus on diversification and low market exposure”, they said, noting that the fund has maintained this approach throughout the prevailing period of inflated asset prices. They added that even before the Covid-19 outbreak and ensuring oil price collapse, risky assets were priced “extremely high”.

“In extraordinary markets, large mis-pricing arises from both fundamental and technical perspectives, something that usually fits our investment philosophy. As always, we have the utmost focus on creating absolute returns at reasonable risk over time.”  

They suggested the more blows the economy and companies take, the greater the risk of recession and other far-reaching consequences.

The flagship Brummer Multi-Strategy vehicle - which invests in a range of single-strategy hedge funds spanning equity long/short, discretionary macro, relative value, and long/short credit, among others – made 3.2 per cent last year.

Earlier in the week the Stockholm-based pioneer, which was established in 1995, said it was taking “rigorous precautions” to ensure business continuity, adding its management operations and support functions are equipped for a potentially “far-reaching scenario of isolation and extensive infection.”