Greg Coffey fund makes big gains after bond bets pay off
Falling yields boost performance of Australian star manager’s Kirkoswald Capital Partners
Greg Coffey, the Australian star hedge fund trader who was once nicknamed “the wizard from Oz”, has emerged as one of the biggest winners from this year’s rally in fixed income.
Mr Coffey, who made his name as an emerging markets manager at GLG Partners, has made a gain of around 18 per cent so far this year at Kirkoswald Capital Partners, the hedge fund he started last year, according to people familiar with the fund’s results.
The performance, which includes a gain of about 5 per cent during July, ranks among the top hedge fund returns in a strong 2019 for many managers.
Kirkoswald declined to comment.
The gains have been driven by Mr Coffey’s bets on falling yields, particularly in EMs, the people said. The yield on the 10-year US Treasury bond has tumbled from almost 2.7 per cent at the start of the year to 1.7 per cent as the US Federal Reserve has pivoted towards looser monetary policy.
In EMs, Brazilian 10-year yields, for example, have dropped from a high of 9.4 per cent in March this year to under 7.2 per cent, according to Reuters data.
Falling yields are fuelling a resurgence in performance for macro hedge funds that bet on moves in bonds and currency markets. Brevan Howard and Caxton Associates are among the big-name managers to have made money after correctly predicting the Fed and the European Central Bank would loosen their monetary policies.
Macro funds as a group have profited, gaining 1.67 per cent on average in July, according to data group HFR. They are now up 6.6 per cent for the year.
In November the Financial Times reported that Mr Coffey was planning to relocate his company to New York from London, citing concerns about London’s status as a global financial centre.
Mr Coffey ran about $7bn of funds at London-based GLG, where he made big gains from bullish positions in EMs. He earned an estimated $300m in 2007, although some positions later proved tough to sell, such as a stake in a Siberian mining company.
He moved to Louis Bacon’s Moore Capital but his performance hit a rough patch in 2011. The following year, at the age of 41, he announced his retirement, telling investors the demands of his job clashed with spending more time with his family.
Mr Coffey built a golf course on land he bought on the remote Scottish island of Jura, before returning to hedge fund management last year.