In Focus no. 69 Managing Director Niels Roth and Head of Structured Finance Henrik Olejasz Larsen, Carnegie Bank, explain what a hedge fund is, how it may invest and how the return benchmark is defined.
So far, the launch of hedge funds in Denmark has not been attractive since the area has not been regulated by any legislation. However, in theory Danish investors could invest in foreign hedge funds, but only in theory, because they would typically be 'overtaxed' compared with investment in shares.
While the Danish Parliament is working on legislation allowing hedge funds in Denmark, a number of alternatives to investing in hedge funds have been introduced on the Copenhagen Stock Exchange.
In the article Niels Roth and Henrik Olejasz Larsen outline the hedge fund investment possibilities on the Danish market. The most recent investment products are two notes, offered by Jyske Bank and Carnegie Bank, which are both linked to a fund of hedge funds. The common characteristics of the notes are 1) that they are issued at a price below par 2) that the coupon is the equivalent of the minimum coupon rate and 3) that they, as a maximum, can be redeemed at par. If the underlying reference fund of hedge funds increases significantly in value, the notes will be earlier redeemed, which will result in a higher realised annual return.
Read the article "Hedge funds and the Danish investor" in Focus no. 69.
