Most macro hedge funds made money in August.
However, while Caxton Associates is well on its way to posting its best results since Andrew Law took over the firm at the end of 2011, Bridgewater Associates’ Pure Alpha funds remain solidly down for the year — underscoring the wide disparity in results, especially among the larger funds.
Caxton Global Investment gained more than 5 percent in August and is now up 34 percent for the year, according to an investor. Caxton Macro Fund, which Law himself trades, is up 47 percent for the year, according to an investor.
“Since March emphasis has been on reflation trades, expressed through fixed income, gold, and foreign exchange,” according to an investor. “The new Fed inflation regime was a part of that. Long standing equity thematic trades centered around ESG–renewables, batteries, and oil were also solid contributors.”
Caxton declined to comment.
Brevan Howard’s Master Fund, meanwhile, returned 0.88 percent last month through August 28, boosting the gain for the year to 24.5 percent, according to a person familiar with the results.
Bridgewater’s Pure Alpha I fund gained 1.36 percent in August. However, it remains down 12 percent for the year, according to a private database and a person familiar with the results. Pure Alpha II rose 1.91 percent last month but is still down 18.6 percent for the year.
All Weather, the firm’s beta fund, rose 2.2 percent in August and is now up 3.8 percent for the year, according to the database and the person familiar with the results.
Bridgewater founder Ray Dalio and the firm like to remind investors and other observers that All Weather and Pure Alpha operate at different levels of expected risk and returns and are sometimes combined by clients to make hybrid funds.
Alas, those that deploy this strategy are still deeply in the red for the year.
In an interview last week on CNBC, Bridgewater co-CIO Greg Jensen stressed the importance of congress passing another stimulus bill valued between $1.3 trillion and $1.7 trillion in order to extend the U.S. economic recovery from the near depression caused by the coronavirus.
“And it depends what it’s used for. ... The policy that gets directly spent in the economy is much more effective per dollar than the dollar that’s preventing more bad things from happening,” Jensen said in the interview. “The money for states is going to prevent negatives. The stimulus checks will be direct positives.”
At this point, it is not clear whether Congress will come to an agreement.
It seems the biggest sticking point is whether to spend nearly $1 trillion on aid for struggling state and local governments, a policy supported by Democrats.
In the interview, Jensen stressed that while certain sectors and segments of the economy have rebounded from the economic bottom earlier this year, the economy still needs a lot more outside help.
“Too much is being drawn of where the economy is on those things relative to how it got there. If you take away the reason it got there, if you take away the supports to income, you’re going to start to see a downturn at the worst possible time,” Jensen said in the interview. “Yes, there are some winners in the economy and the average looks OK, but there are still huge losers versus those winners, and that’s a big societal challenge.”
Elsewhere, MKP Opportunity gained 0.46 percent in August and is up just 1.33 percent for the year, while MKP Enhanced Opportunity rose 0.60 percent for the month and is up 2.91 percent for the year, according to an investor in the funds.
