Brevan Howard’s $20bn flagship fund falls for second year http://on.ft.com/1moEc0V
Brevan Howard’s $20bn flagship fund is down for a second year in a row in a further blemish to the trading record of one of the largest hedge funds in Europe.
While Brevan Howard’s 0.8 per cent loss for 2015 is small compared with some of its rivals, it inflicts a symbolic wound to a hedge fund that until 2014 had proudly defended its history of having never lost money in a calendar year for its clients.
The loss comes as some of the world’s highest profile hedge fund managers have suffered brutal losses over the past 12 months and several large funds have chosen to close down altogether.
The net asset value of the BH Macro listed fund, a feeder to Brevan Howard’s flagship Master Fund, fell from $21.06 at the end of November to $20.45 up to the week of December 18, taking the fund’s loss to about 0.8 per cent for 2015.
Alan Howard, who co-founded the hedge fund with a group of Credit Suisse proprietary traders in 2003, had already issued an apology to his investors for a “disappointing” investment performance in 2013, and pledged to deliver “a more satisfactory outcome for 2014”.
However, the Brevan Howard Master Fund went on to lose 0.8 per cent that year.
Although the Master Fund, which is run by Mr Howard and a team of traders, returned 12 per cent in 2011, it generated just under 4 per cent in 2012 and 2.7 per cent in 2013 after fees, before falling to a loss in 2014.
The ongoing struggles of Brevan Howard to make money trading in financial markets comes as its biggest European rival BlueCrest decided to return all outside money to its investors to focus solely on trading the fortunes of its founders.
Brevan Howard and BlueCrest’s strong performance during the biggest bouts of market volatility in the global financial crisis won both hedge funds many new investors, with its total assets under management at each swelling to more than $50bn.
Many of these new investors were public pension funds looking for a way to hedge the rest of their portfolios against large sell-offs, as well as making returns that were not correlated to the wider bond and equity markets.
Following several years of mediocre performance, a number of high-profile clients have pulled out of both Brevan Howard and BlueCrest.
In 2014, the influential London Pension Fund Authority redeemed its entire investment from Brevan Howard while BlueCrest saw several consultants to public pension funds in the US and UK recommend their clients to redeem their investments.