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Danske Asset Management launches new interest-rate hedge fund

By end of Q1 2018, Danske Asset Management hopes to offer existing and new clients an interest-rate hedge fund. European government bonds are to be the main area of interest.

Photo: Danica

Danske Bank Asset Management is seeing a surge in demand for absolute-return products. With all of its existing hedge funds now too large to take in more capital, the banking arm sees scope to launch a new fund focusing on a new area.

"We expect the product to be ready by the end of Q1 or the start of Q2 in 2018," says Michael Petry, head of hedge funds at Danske Asset Management, to AMWatch. He explains that the negative interest rates are one of several reasons why it makes more sense to establish a hedge fund rather than a traditional bond fund.
"We expect our new manager to position himself in the market so that, regardless of whether interest rates rise or fall, he can generate returns. In a traditional bond fund, you would typically lose money as interest rates rise," says Michael Petry.

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