Market upheavals drive biggest gains since 2008 for macro hedge funds

Keep knowledgeable with free updatesSimply signal as much as the Hedge funds myFT Digest — delivered on to your inbox.Macro hedge funds are having fun with their finest yr since at the least 2008, as large swings within the value of currencies, commodities and bonds have supplied fertile situations for merchants.An index from information supplier HFR monitoring the returns of such funds — which purpose to revenue from financial developments by buying and selling equities, bonds and commodities — was up 16 per cent on the finish of November, placing the sector on track for its most worthwhile yr in information stretching again to 2008. Hedge funds corresponding to Andrew Legislation’s Caxton and Chris Rokos’s RCM have loved returns which have been effectively into the double digits this yr, in line with figures seen by the FT.Macro managers say sharp market strikes, such because the drop within the greenback triggered by Donald Trump’s commerce warfare, a sell-off in long-term bonds, and a relentless gold rally, have supplied essentially the most beneficial backdrop for the sector in a few years.“There’s loads to work with, which doesn’t make it simple to get proper,” mentioned Ken Tropin, the founder and chair of macro fund Graham Capital, who mentioned the agency’s discretionary portfolio managers had made most of their returns buying and selling the greenback, gold and the US authorities bond market. “However at the least there’s alternative.”Tropin mentioned these portfolio managers relied on so-called “tactical”, or short-term, buying and selling methods this yr, in order that they might transfer shortly in asset courses corresponding to currencies which have been unstable in 2025.Whereas that method began earlier than the Trump administration unveiled broad tariffs in April, Tropin added, “that was actually the wake-up name for everyone”.Macro funds made cash each by shorting the greenback, but additionally by piling into rising market currencies and bonds, which rallied as a weaker greenback allowed nations to decrease rates of interest and refinance their debt extra cheaply.“Each underlying asset class like commodities, FX and bonds had nice alternatives this previous yr,” mentioned an government at a big European household workplace that invests in hedge funds. “There was the exuberance in gold and treasured metals, the bear market in US greenback, and the divergence between the actions of central banks together with the Financial institution of England and Federal Reserve.”The sturdy returns prolong a renaissance for the sector which struggled in the course of the decade of very low rates of interest and muted volatility that adopted the worldwide monetary disaster of 2008-9. “Should you didn’t generate profits this yr as a macro fund it is going to be tough to clarify,” mentioned one hedge fund government within the sector.Some funds additionally profited from a sell-off in long-term bonds pushed by worries over extreme authorities borrowing in large economies, by betting on a rising hole between short-term and long-term borrowing prices.Caxton and Graham each made cash from such “steepener” trades, whereas Caxton additionally profited from rallies in gold and copper, in line with individuals conversant in the funds’ performances. Caxton’s World, the agency’s primary fund which manages $10bn, was up 14 per cent to December 5, in line with an investor, whereas Caxton Macro, the $9bn fund run personally by Legislation, was up 18 per cent.The Absolute Return and Multi-Alpha Alternative funds at Graham have been up 8 and 13 per cent respectively on the finish of November, in line with individuals conversant in the figures. Rokos made 17.5 per cent as much as the top of November, in line with one other one who had seen the numbers. Greg Coffey, the Australian hedge fund star as soon as nicknamed the “Wizard of Oz”, has emerged as one of many greatest winners this yr. The flagship fund at his agency Kirkoswald Capital has made 21 per cent by mid-December, in line with individuals conversant in the figures.Each Graham and Rokos snapped up UK authorities debt when long-term borrowing prices soared to their highest ranges this century, profiting as gilts rallied and yields fell again, in line with individuals conversant in the trades. Brevan Howard had a extra combined efficiency. Its Grasp Fund was up simply 0.4 per cent as of the top of November, whereas its multi-manager fund Alpha Methods, which makes use of a wide range of funding approaches, was up 7.2 per cent over the identical interval, in line with individuals conversant in the returns. Brevan, Rokos, Caxton and Kirkoswald all declined to remark.