Danish Manager Plans Hedge Fund, Seeks Prime Broker

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Danish Manager Plans Hedge Fund, Seeks Prime Broker

Sweden-based asset manager SEB Invest plans to launch a market neutral hedge fund in Denmark, which will use interest-rate swaps, forward rate agreements, futures and listed equity options for investing and hedging. The fund will look to execute all its derivatives transactions through a prime broker which it expects to chose in the next couple of weeks, according to Niels Lorentz, institutional client salesman in Copenhagen. The most important criteria for the prime broker is to have a global reach because the fund wants access to the Japanese and U.S. markets.

"The fund managers will decide on a position and then be free to use the instrument which is most cost effective," Lorentz explained. One example would be to use interest-rate swaps to take advantage of possible convergence of eastern European interest rates with the European Central Bank interest rate.

The fund will start marketing next month and expects to commence trading in November with EUR50 million (USD44 million) in assets. He said, "This is the first hedge fund in the Danish market so clients are going to need to go up the learning curve [before they invest]." He expects this growth will boost the fund to EUR200-300 million over the next two years.

Lorentz said the hedge fund aims to return 10-15% with an annual standard deviation of about 6%. The fund is free to invest in any investment-grade liquid product and will have an average leverage of two-three times the nominal value, with a maximum leverage of seven times the fund.

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