Several high-profile trend-following and commodity hedge funds that have been struggling for the past year or two suffered big losses in May.
Their woes look especially stark since the high-profile macro funds that use fundamental methods to make their investment decisions are faring pretty well this year. One of the losing funds is Man Group’s trend-following AHL Diversified fund, which lost a whopping 8.74 percent in May, putting it in the red for the year by 0.59 percent. Its investors are mindful that the fund lost money in both 2012 and 2011.
According to Man marketing documents, the London-based fund “targets double-digit, annualized returns.” So much for that. The fund uses computer programs to identify inefficiencies in more than 300 instruments globally, including stocks, bonds, currencies, interest rates, energies, metals, credit and agricultural commodities.
Meanwhile, the Aspect Diversified fund, a managed-futures fund similar to AHL Diversified and managed by London-based Aspect Capital, was down 6.4 percent in May and is now off 1 percent for the year. Both funds reportedly lost big bets on U.S. bonds as interest rates abruptly changed directions and began rising a couple of weeks ago.
Another onetime highflier that continues to struggle is Christian Levett’s Clive Fund, managed by his London-based hedge fund firm, Clive Capital. Through May 24 it was already down 3.27 for the month and 1.54 percent for the year. It is not clear how it fared in the final week of the month. However, the fund lost 9 percent in 2012 and 10 percent in 2011. The commodities fund reportedly had less than $2 billion under management at year-end, down from about $3.6 billion the year before.
In 2008, when most financial markets imploded, Levett was among several commodity managers who made money, steering his fund to a 44 percent return. As a result, he qualified for the Institutional Investor’s Alpha Rich List, earning $85 million in 2008.
Levett is a former top commodities trader with Louis Bacon’s Moore Capital Management, where he reportedly generated a 39 percent return in 2004, 47 percent in 2005 and 31 percent in 2006. On his website, Levett says he trades all commodity groups, including global energies, base metals, precious metals, grains, vegetable oils, agricultural products, soft commodities, meats and exotics.
Another so-called systematic investor, David Harding’s Winton Futures Fund, also lost money in May, dropping 2.4 percent for the month after losing about 3.6 percent in 2012. However, it is still faring much better than many of its competitors for the full year. Through the first five months, it is up 6.5 percent.
The story is a lot different for the well-known macro funds that draw on fundamental research. For example, after a mediocre first year running solo, Andrew Law saw his Caxton Global Investment surge in May by 5.5 percent, and the fund is now up 13.3 percent for the year. In 2012 it was up just 0.70 percent, the first year after founder Bruce Kovner retired. Paul Tudor Jones II’s Tudor BVI was up 11 percent through May 24, while Louis Bacon’s Moore Global Investments was up more than 13 percent through May 16.
