Ray Dalio’s Bridgewater fund had an outstading 8.3% gain in January – similar to the return of most trend-followers. Strangely, January was a mixed month the whole universe of hedge funds. But some had the best and most exciting monthly performance in years while others just couldn’t wait till it ended. Central banks all over the world unexpectedly triggered bursts of volatility as well as unusually violent currency movements.
It is no surprise then that hedge fund managers had a mixed start to the new year. For instance, Bridgewater Associates, which is Ray Dalio’s hedge fund company, posted an impressive 8.3% gain in January. Meanwhile, BlueCrest Capital Management, run by Michael Platt, was forced to close down one of its portfolios, Marko Dimitrijevic’s Everest Capital Global had an $830 million hedge fund wiped out and Fortress Investment Group LLC experienced a loss of 6.9% (because of the CHF hundreds sigma rise).
Bridgewater, which happens to be the world’s biggest hedge fund in terms of AUM, was also the best performing one last month. On average, macro funds showed a 2.6% rise in January, which, according to the intelligence company: Hedge Fund Research Inc., is the best monthly return since December 2010.
This rise comes at a time when government debt has rallied and oil prices have slumped. During the same period, the media hedge fund saw a 0.5% gain while equity strategies fell 0.6%. GAM Holding money manager Anthony Lawler wrote in a report that January was a volatile month across asset classes. He noted that a majority of global macro investors were rewarded with gains by the end of the month.
John Burbank from Passport Capital said that the boring macro environment is over. Before it was one which other hedge fund managers including Michael Novogratz and Paul Tudor Jones described as boring and calm just last year. Burbank believes that recent central bank actions, increased stimulus across the world as well as an imminent raising of U.S. interest rates have meant that the market is filled with opportunities.
Passport Capital, which manages over $4.1 billion, saw a 17% jump in its special situations fund in January, while its main fund also rose by an impressive 9.2%.
The main fund of Jones’ Tudor Investment Corp., which oversees $13.5 billion, rose 2.7% during the same period. Jones said in May last year that hedge funds needed “a macro doctor to prescribe central bank Viagra” at a time when monetary policies all over the world were keeping interest rates artificially low. His principal fund rose 3.2% in 2014, despite an aggregate 0.5% loss for the first ten months of the year.
According to an unnamed source, Bridgewater’s Pure Alpha II fund rose by 3.6% last year. Since its inception in 1991, the successful fund has posted annualized returns of 13%. $8.7 billion MKP Capital Management, a New York-based hedge fund company, saw its MKP Opportunity Partners fund gain 3.6% and a leveraged version of the fund 5.5%.
The biggest surprise in the hedge fund world was the decision by the Swiss central bank to end a three-year cap against the euro, in effect blindsiding investors. BlueCrest, Platt’s $15 billion hedge fund firm fell 5.5% in the first half of January this year.
Stock-focused managers have also struggled in the new financial environment. Dan Leob’s Third Point quoted a friend as describing the environment as a “haunted house market” where unexpected events are lurking at every corner. His Third Point Offshore Fund saw a 2.3% decline in January, while the main hedge fund of David Einhorn’s $11.8 billion Greenlight Capital fell by 2.5%. The Standard & Poor’s Index also fell by 3.1% in January.
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