| Credit: Bigstock Photo |
The so-called Trump rally following the U.S. presidential election in November had a major positive impact on several prominent macro hedge funds, enabling them to move from losing to winning territory for the year.
At least two funds that had lost money for two straight years finally produced gains in 2016. Meanwhile, another prominent macro fund posted its first loss since the financial crisis despite enjoying a profitable run following the elections.
The macro funds that did well in the final two months were generally short the U.S. bond market, long the dollar, long stocks in general, and in some cases long certain emerging markets. Within these broad market moves, funds fared better or worse depending on their own specific trades within those broad markets. Also, keep in mind that in the final week or two of the year, the big profitable trades reversed somewhat, mitigating the gains for some funds.
One of the funds that posted its first gain in three years was Robert Citrone’s Discovery Global Macro Fund, managed by Discovery Capital Management. It gained about 9 percent in 2016, even after losing roughly 5 percent in December.
It fell 8.2 percent in 2014 and was off another 5.8 percent in 2015. So the fund is still below its high-water mark.
According to one hedge fund expert, in addition to shorting rates and going long the dollar, Discovery made a heavy bet on stocks in the final two months of the year. “It does so many idiosyncratic things,” adds an expert who knows the fund.
Meanwhile, Brevan Howard ’s flagship Brevan Howard Fund returned 3.02 percent for the year. Most of the gains actually came in November, when it returned about 5.6 percent, which at the time brought it gains for the year to 2.8 percent.
At the end of the third quarter, the fund headed by Alan Howard was down by about 3.4 percent. Last year it lost 2 percent after declining by 0.78 percent in 2014.
Paul Tudor Jones II’s Tudor BVI funds, managed by Tudor Investment Corp., also enjoyed mini-surges after the election.
Tudor BVI’s flagship Class A shares, which were down about 3.3 percent as of the end of October, enjoyed a nice rally into year-end. However, they still finished the year down 0.57 percent, their first loss since the financial crisis. They had previously posted four single-digit gains in the past five years. The newer class of Tudor BVI gained about 1 percent for the year after entering November down 2.2 percent for the year.
The Tudor Discretionary fund, launched in 2012, finished the year up 4.3 percent after entering the final two months of the year down about 1.8 percent.
The Rubicon Global fund enjoyed perhaps the sharpest reversal of fortune last year.
The fund surged more than 20 percent in November alone, turning a huge loss for the year into a roughly 2.2 percent gain at the time. It added nearly 5 percent in December, finishing the year up 7.30 percent.
Among smaller funds, the Haidar Jupiter Fund rose about 1.85 percent in December after losing money in October and November. It finished the year up 14.55 percent. It currently manages more than $300 million.
