The basic philosophy behind Nykredit Asset Management’s hedge Fund strategies is to isolate the core value of covered bonds.
In our hedge fund strategies we are looking to optimize the core value of covered bonds, which is not related to the general interest rate risk. To optimize the risk adjusted return of the strategy we leverage by using financial instruments.
The general interest rate risk on the bonds is hedged in derivatives or long/short strategies.
The main focus is the Nordic Covered bond market, and the strategies have as well the possibility to add AAA exposure from USD, GBP and EUR investments. In the strategy we use financial instruments to leverage the investments and to achieve an exposure to or hedge specific risk elements.
Under normal market conditions, the return is expected to have a low correlation with traditional asset classes, but in situations with market stress and turmoil in the financial markets, higher correlation with traditional asset classes is expected.