Global macro funds roar back to life
Donald Trump’s US presidential election victory has led to huge paydays for some hedge funds.
Some of the biggest winners include Jeffrey Talpins’ Element Capital and Kenneth Tropin’s Graham Capital Management, which were positioned in “Trump trades”, or assets that did well when the president-elect prevailed.
Element gained about 9 per cent in November while Graham’s Proprietary Matrix Fund — which includes strategies run by fund managers and computer-driven ones — made about 3 per cent, two people familiar with the figures told DD’s Amelia Pollard.
After years of middling returns following the 2008 financial crisis, hedge funds that specialise in trading currencies, commodities, bonds and stocks are back to making big gains from bets on market swings around last month’s presidential election.
Pablo Calderini, the chief investment officer for Graham, said the fund ran “many scenarios” and “stress tests” to ensure the portfolio was well guarded against any shocks that might come its way — especially if the race was so close that it sparked social unrest.
The US dollar has emerged as one of the biggest Trump trades, with the currency up 5.4 per cent against a bunch of other currencies since the start of October.
Still, the going’s good for almost everyone right now. The S&P 500’s also been on a tear, up more than 27 per cent this year.
“None of this is breaking the pound. None of this is a massive bet on the yen,” said Steven Kelly, the associate research director at the Yale Program on Financial Stability.
The real question is how long the good times will last. Kelly added: “If and when Trump blows something up, are the macro hedge funds on the right side of that trade as well?”