Winner: Best fixed income hedge fund and Winner: Best non-directional hedge fund over 10 years

2010 awards
Winner: Best non-directional hedge fund over 10 years
Winner: Best fixed income hedge fund
Shortlist: Hedge fund of the decade

Nektar, a veteran of the hedge fund universe, was launched in January 1997 as one of the Swedish hedge fund group Brummer & Partners' first hedge funds.

The fund's success to date is put down to its mix of a relative value and directional approach as well as its team's long-term experience and in-depth knowledge of domestic Swedish markets.

The team is led by Nektar's chief investment officer (CIO), Kent Janér, who holds overall responsibility for the fund's portfolio. Under the combined management of Janér, Kerim Kaskal, Torbjörn Olofsson, Thomas Andersson, Fredrik Attefall and Thomas Orbert, Nektar has provided net cumulative returns of 393.2% since inception and had just one down month in 2010.

Learning along the way has been the key to their success, according to Janér. "One has to develop all the time. Had we known as much today as we did 10 years ago, we would have made much more money. If we didn't know more today than we did 10 years ago, we probably would not be in business," Janér comments.

The fund's portfolio combines relative value positions based on pricing anomalies in fixed income markets with directional fundamental positions and is dominated by fixed income and currency instruments. Its investment process is largely qualitative with strong quantitative support.

Nektar's portfolio managers form investment ideas by monitoring market pricing of various financial instruments as well as macroeconomic and political developments.

Each portfolio manager conducts extensive research resulting in positions that are adapted to their individual portfolios as well as the fund as a whole. The portfolio managers are supported by a strategist and a team dedicated to the development of quantitative research tools.

Individual positions are balanced against each other to optimise the overall risk in the portfolio and many positions (over 100) are established to reduce the risk in the portfolio. Position size is assessed by considering risk contributions, market liquidity and balance sheet considerations.

Although the portfolio is mostly made up of fixed income and currency instruments, it occasionally has exposure to equity indexes, credit indexes and commodity futures. The fund's largest exposures are in Sweden, the eurozone, the UK and the US.

The fund's largest investor is the Brummer Multi Strategy Fund, representing 28% of its investor base. Pension funds, funds of hedge funds (FoHFs), foundations, family offices and high net worth individuals (HNWIs) are also significant investors to the fund.

To date the greatest challenge for the fund has been dealing with financial markets in 2008. This, according to Janér, was the fund's only down year (down 6% that year) as "a lot of things happened that year that we thought were unthinkable before that. We were surprised at how vicious and fast and strange markets could be," he explains.

However, Janér responded to this disappointment pragmatically, commenting "we learned a lot from that and it had implications for our strategy going forward. We had reasonable safety margins but we realised after that we needed even higher safety margins," he comments.

According to Janér the fund has grown very rapidly over the past two years reaching its all-time peak of $2.9 billion of assets under management (AUM). Although he is pleased with this development, he is keeping a cautious eye on the fund's rate of growth as rapid expansion could trigger liquidity problems or worse. "You only realise that you have grown your assets too fast too late," he warns.

His main focus for the coming years will remain on "working as hard as we can to continue to deliver good risk-adjusted returns. The market is getting better, the competition is getting better and everyone is getting smarter, so we have to do that as well," he concludes.

Nektar is also available in an offshore version, Nektar (Bermuda). Nektar (Bermuda) strives to replicate the return of the Sweden-based Nektar fund. This is achieved through total return swaps. Contrary to the Sweden-based fund, Nektar (Bermuda) does not pay any dividend.

Fund facts
Full name of fund: Brummer & Partners – Nektar
Fund managers: Kent Janér (CIO), Kerim Kaskal, Torbjörn Olofsson, Thomas Andersson, Fredrik Attefall, Thomas Orbert
Name of investment/management company: Nektar Asset Management
Contact information: Jan Burén (+46 8 566 21 63, jan.buren@brummer.se)
Launch date: January 1, 1998
Strategy: fixed income
Assets under management: $2.9 billion
Net cumulative performance since inception: 393.2%
Annualised return: 13.1% (December 1997-December 2010)
Annualised volatility: 7.3 (December 1997-December 2010
Sharpe ratio:1.4
Share classes: euro, Swedish kroner, US dollar
Administrator: Citco, BFS
Auditor: KPMG
Custodian: SEB
Domicile: Sweden, Bermuda
Management fee: 1%
Performance fee: 20%
Minimum investment: $250,000
Lock-in: none
Redemption/liquidity terms: monthly, seven banking days' notice; no lock-up/gates; no sales/redemption fees