Interview

Markets and Algorithms - Hafnium Investment’s Journey in Copenhagen

Interview

Markets and Algorithms - Hafnium Investment’s Journey in Copenhagen

Quantitative investment strategies are already running billions of dollars in New York and London. Almost non-existent in Scandinavia, a new fund, Hafnium Investment, proposes the first quantitative macro systematic fund of its type in the Nordics. We met the founders for a talk at their new office in Copenhagen, Denmark.

When

We were invited to their office in Bredgade Copenhagen, to better understand the strategy. Their office looks like a trading floor the size of a one-bedroom apartment. In front of his four screens, the CIO, Victor Brassart Clausen is reviewing some code and data sets on three screens while Bloomberg running on the fourth one. The desk is overflooded with books, articles and old coffee cups. On the other side, Alexis Dubois, CEO of the fund, is on the phone negotiating upcoming partnerships while trying to find room on the whiteboard to publish the most important figure of all: what is the committed capital invested at this stage?

Markets and Algorithms: Hafnium Investment’s Journey in Copenhagen
Victor Brassart Clausen and Alexis Dubois

Being a tall grey haired French guy in his early thirties, you come to wonder why Alexis might install himself in Copenhagen. “I never visited the country before starting the firm. It was Victor who convinced me to do the move”. They met each other at the start of their careers in London at Morgan Stanley. They passed the same assessment centre. A “super day” where they have to meet with different people from Sales and Trading, and solve cases under stress. Looking back, they both thought of the process as being quite silly: “we had to pitch a stock, and solve brain teasers, two things which demonstrate zero correlation to actually being good at the job”.

“We decided to do things differently,” Alexis continues to explain, “Instead, we picked our interns, after initial screening phone calls with Victor and myself, by making them pass a four-hour written exam in Statistics, Derivatives, Programming and Finance followed by a 1-hour interview to review and question their answers”.

Alexis then emphasised: “One of the main reasons, we set up here was the incredible Danish talent pool. But also, the market seems to be shifting regarding their hedge fund allocations. Just a couple of years ago, it wasn’t in the cards to imagine a Scandinavian pension fund allocating quantitative strategies, but this is currently shifting”. With a playful smile, he adds: “And we have time, we are here to stay.”

Hafnium Investment looks like and feels like the typical quant fund. So, we proceed to ask Victor what differentiates them: “In any investment firm, sooner or later a problem is going to appear and it is the correlation between your investment strategies or your signals. It’s like being at the horse track and not knowing if you are betting 10, 100 or 1000 dollars. Sudden correlation spikes muddles with your risk sizing.”

“So, when we construct strategies, we really try to keep the independency between them and equal risk-weighting. And it is much harder than one might think. To do so, we need to constrain everything. If we run a certain type of strategy, we only run it on a certain asset class, and geographical focus if this strategy has a particular type of payoff, we make sure that we have the opposite payoff in one of the other strategies and so on. Only when these conditions are met, we start doing what you might expect from a quant fund, looking for signals, patterns and anomalies in the data”.

“This is the most exciting job in the world,” Alexis chimes in, grinning. “At least, that’s what he keeps telling me,” he adds, and both he and Victor laugh. “Look, we’re ambitious, driven people, and we genuinely believe our product is unique. But only time will tell if the market agrees.” One thing is certain: this small office in Copenhagen has big plans.

As the interview wraps up, it’s clear that Hafnium Investment has chosen Denmark for more than just its Nordic charm. With access to a highly skilled talent pool, a supportive regulatory environment, and increasing interest from Scandinavian pension funds, Denmark is an ideal location for innovative financial firms. By establishing in Copenhagen, Hafnium can benefit from the region’s growing appetite for advanced quantitative strategies. 

 

Visit Hafniums Investment's website here

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