Norwegian Asset Manager Plans First Hedge Funds

  • 06 Jan 2003
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GN Asset Management, the asset management arm of Norwegian banking and insurance group,the Gjensidige NOR Group, with EUR14 billion (USD14.67 billion) under management, is launching two single-strategy hedge funds. The funds both have target sizes of at least USD100 million and will use over-the-counter derivatives, according to Sverre Hope, first v.p. in business development in Lysaker. Hope said the firm already employs these strategies on a small scale, but is offering the funds externally to attract outside investment from pension funds and endowments.

Approximately 20% of GN Asset Management's capital originates from outside investors. There is no limit to the amount of outside funds the firm would like to manage. "I would like to see it as high as possible," said Hope.

The two funds will be a global macro hedge fund and a global fixed income fund. The global macro hedge fund will take positions in both stocks and bonds. This fund can use any type of OTC derivative to boost returns or hedge. It has a target return of 10-15% above the Norwegian money market rate, which is 6-5.5% and unlimited leverage constraints, although there is a tracking error control, Hope explained. The global fixed-income hedge fund will be limited to using fixed income and foreign exchange derivatives to gain exposure or hedge risk. It has a lower target return than the macro fund, but the rate has not been set. It also has no limit to the amount of leverage used. They will both begin trading this month.

GN Asset Management plans to use a group of firms as its clearing institutions, including JPMorgan, HSBC and Deutsche Bank. The asset manager already invests in a fund of hedge funds.

  • 06 Jan 2003

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