Skandia Liv likely to up hedge fund investments by year-end

Skandia Liv, the life assurance arm of Sweden’s Skandia with $27 billion in funds under management at the end of last year, is set to increase its investments in hedge funds by the end of the year, according to Malin Björkmo, Skandia Liv chief investment officer.

Björkmo, who joined the assurer in March, said a thorough review of Skandia Liv’s hedge fund investments would take place in Q3. “We intend to proceed with our investments in hedge funds this Autumn so we can invest as much as we can,” Björkmo told RiskNews.

At the end of last year, Skandia Liv had $60 million, about 0.2% of its total portfolio, invested in hedge funds, although this figure has grown to 1% of the overall portfolio – $270 million, assuming the portfolio has not fallen significantly this year.

Local hedge fund investments to date include Brummer & Partners’ Zenit long/short global equity fund; Brummer’s Nectar multiple strategies, market-neutral, relative-value fixed-income fund; a directional, fixed-income fund called Tanglin; Lunden’s Eikos l/s Nordic equity fund; and Lancelot Merlin, a l/s European equity fund. “This portfolio was put together to get some diversification,” added Björkmo. "We have started to look at a few different categories to get a feel for where we want to be.” This includes potential investments outside the tight Nordic financial markets.

While Björkmo said Nordic-based hedge funds are not yielding such strong returns as in the past, she believed it was important to find assets with different risk/return characteristics for diversification purposes.

Björkmo also said that while the proliferation of fund of hedge funds in the region was good for smaller institutions, she believed the extra fees charged for diversification could be avoided by large funds capable of investing in a portfolio of hedge funds.