Now Is the Time to Turn to Hedge Funds, Nordea Chairman Says

(Bloomberg) -- Bjorn Wahlroos, the chairman of the biggest Nordic bank, says now is the time for investors to turn to external managers such as hedge funds to navigate their way through more “complex” strategies.

Doing so will help them cope with the high levels of uncertainty ahead as equities run out of steam, Wahlroos, who heads the board of Nordea Bank Abp, wrote in a column that was posted on the website of a unit of another firm he chairs, Sampo Oyj.

“Active asset management, trading, hedge funds and other alternative strategies seem attractive in the current environment,” Wahlroos said. He cautioned against reading too much into stock-market gains so far this year, which he characterized as a “dead-cat bounce.”

“I wouldn’t start increasing the weight of equities yet,” Wahlroos said. He also urged investors to be discriminating in their choice of external manager, given the huge swings in performance, and said steady returns amid last year’s volatility are a clue investors should utilize.

As an industry, hedge funds lost 4 percent in 2018, marking their biggest decline since 2011. Many lost more than the broader market as political risk, rising concerns on economic growth, prospects of a trade war and the combative stance of President Donald Trump posed a challenge.

Despite all the chaos, Wahlroos doesn’t think the global economy is heading toward a crisis similar to that of 2008.

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“The darkening economic mood has made investors very cautious in the stock markets after a long rally,” he said. “But I don’t believe in any catastrophic slump.”

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