July 7, 2018
Financial Times has published its ratings of Europe’s top hedge funds. UFG Special Situations Fund, with return of 16.29% net on a three-year annualised basis, was listed among the top five Funds.
“Sometimes it is the low-profile companies that make big money”
They are the hidden gems of the European hedge fund industry. Frequently overshadowed by the sector’s big names, many of these funds have a laser-like focus on a particular sector or country — but their returns speak for themselves.
Preqin, the data provider, sets benchmarks for three-year and five-year annualised returns, of 4.98 per cent and 6.3 per cent respectively, derived from mean annual returns for managers based in Europe.
The top performers beat these by up to five times. A business caring for people with spinal injuries and Scandinavian small-caps are among the companies that propel them into the ranks of Europe’s top-performing hedge funds. They are standouts in a sector that has grown rapidly.
European hedge fund managers held €587bn in assets at the end of March. They grew almost 10 per cent last year after a torrid 2016 in which the industry was hit by outflows.
We took a closer look at the top five performers in the three-year and the five-year periods using data supplied to FTfm by Preqin. All have assets of at least $100m, the minimum amount at which a hedge fund can be viable, according to Preqin. All have significantly outperformed the benchmarks set by the data provider.
The top 20 funds are run by 16 groups. Of these, more than half are based in London and the rest in Russia, Switzerland, Scandinavia and Spain. Analysis of the list, however, fails to yield any patterns in terms of size, location or strategy — save for the fact that most are extremely specialised.
Rhenman & Partners Asset Management, a Swedish manager investing in healthcare, points to its links with the Karolinska Institutet, as one factor in its success. The medical research university has produced several Nobel Prize winners. Two of the top performers, Spring’s Specialised Russian Growth Fund and the Special Situations Fund run by Moscow's UFG, focus on Russia.
The market has been a good one for specialists in emerging markets able to navigate the complexity of investing in a country hit by sanctions and diplomatic tension with the west.
“While that’s made some investors more wary, if you have a good understanding of how the Russian economy works, that creates a platform for some investors to be successful,” said Anna Walker, director for Europe at Control Risks, a consultancy.
UFG
UFG Asset Management is country-focused asset manager. From its headquarters in Moscow it offers hedge funds that invest in equity and fixed income in Russia and central Europe, including Kazakhstan and Uzbekistan. UFG’s Special Situations Fund has returned a net 16.29 per cent on a three-year annualised basis.
Its website states that the fund “is a hybrid equity and fixed income discretionary strategy focused on special situations in Russian stocks and bonds. The fund can also opportunistically invest in private debt and equity instruments.”
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