May 2, 2019 / 4:02 PM / 25 days ago

UPDATE 1-Loss of top investor forces Swedish hedge fund Nektar to close

* Brummer & Partners to redeem entire investment in Nektar

* To complete redemption by end-May

* Latest Macro fund to feel pinch of low market volatility (Adds detail from statement, quotes, bullet points, background)

By Simon Jessop

LONDON, May 2 (Reuters) - One of Sweden’s oldest hedge funds, Nektar Asset Management, is to close after its biggest investor Brummer & Partners said on Thursday it planned to withdraw its entire investment after a disappointing performance in recent years.

Brummer said it would take back the money, which accounts for two-thirds of Nektar’s total assets of around 10 billion Swedish crowns ($1.1 billion), by the end of May.

“The management of the Nektar fund has been discontinued and the fund will be liquidated,” Nektar’s chief investment officer and chairman of the board, Patrik Olsson, told Reuters.

Set up in 1998, Nektar invests across fixed income and currency markets, often by taking views on macroeconomic events, a style of investing that has struggled to outperform in an era of record low interest rates and low market volatility.

Last year proved particularly tough for macro funds, hit by volatility spikes, as well as unsuccessful emerging market and dollar-linked bets.

Brummer invested in Nektar through its Brummer Multi-Strategy fund (BMS), which invests across a number of underlying funds with the aim of producing returns with a low correlation to moves in the broader stock and bond markets.

While Nektar had produced average annual returns of more than 9 percent since it launched, BMS, which had been invested in the fund since 2002, said recent returns had underwhelmed, without giving details.

“Nektar has been a pillar of BMS from the outset and its risk-adjusted contribution has been strong over time,” Mikael Spangberg, BMS’s chief executive and portfolio manager, said in the statement.

“Recent years have been a challenging financial environment for Nektar’s strategy on account of low interest rates and the extreme pricing of volatility. The future prospects are also difficult to assess.”

BMS is currently invested in eight funds: AlphaCrest, Arete, Black-and-White, Bodenholm, Florin Court, Lynx, Manticore and Observatory, it said.

$1 = 9.5249 Swedish crowns Reporting by Simon Jessop; editing by Huw Jones and Elaine Hardcastle

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