Hedge fund Caxton makes $270mn in market turmoil

Hedge fund Caxton Associates has reportedly made approximately $270 million this month, benefiting from successful bets on U.S. government debt and the Japanese yen, positioning itself as a significant winner amidst recent global market turmoil. The London-based firm achieved a 3.9% return in its $4.5 billion Macro fund, managed by CEO Andrew Law, during the first nine days of August, as per investor reports reviewed by the Financial Times. Additionally, the $8.5 billion Global fund gained 1.1%, according to an investor.

These profits come amid a turbulent period for global markets, driven by concerns that the U.S. Federal Reserve has been slow to reduce interest rates despite signs of an economic slowdown. U.S. megacap technology stocks and Japanese equities were particularly hard-hit, while the market's volatility index, often referred to as the "fear gauge," reached its highest level since the early days of the COVID-19 pandemic.

Caxton, which manages a total of $13.5 billion in assets and is renowned as one of the leading macro hedge funds globally, benefited from a strategy that short-dated U.S. Treasuries would outperform longer-term bonds, according to the report. The firm also profited from a position on the yen, which strengthened significantly against the dollar over the past month as investors unwound positions in higher-yielding assets.

These gains have pushed the Caxton Macro fund up 9.9% for the year, according to the investor update, following gains in July, while the Global fund is up 5.2%. Macro funds, which speculate on movements in global bonds, currencies, and other assets, have averaged just a 0.2% gain so far this year through Monday, according to an index compiled by data group HFR. Caxton, founded in 1983 by U.S. billionaire Bruce Kovner, once flew copies of the Financial Times from London to New York in its early days, claiming it provided a competitive edge over rivals.

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