Weekly update

Failed Fed bets leave Brevan Howard fund down 3% in February

A bet gone wrong on a decline in US interest rates resulted in Brevan Howard's main fund facing an estimated 3.2% loss in February. This setback marked one of the worst months for the Channel Islands based firm since it began trading in 2002, as reported by Bloomberg. The Master Fund, currently representing about $12.4 billion of Brevan Howard's total assets, has incurred year-to-date losses of approximately 3%. In 2023, the fund lost 1.9%, following a significant 22% gain in the previous year. The miscalculation by traders at the firm, regarding the timing and size of potential interest rate cuts by the US Federal Reserve, led to the unsuccessful bet. This occurred as US government bond yields rose when Fed officials, including Chairman Jerome Powell, indicated a reluctance to lower rates until there is certainty about controlling inflation.

Brazilian hedge fund Vinland to open New York office

Vinland Capital, the Brazil-based hedge fund firm founded by former Goldman Sachs Group Partner Andrew Laport, is expanding its reach to the US by opening a new office in New York. According to a Bloomberg report, sources familiar with the matter confirm the move, emphasizing Vinland's goal to strengthen connections with its existing US institutional investor clients. With approximately BRL 14 billion ($2.8 billion) in assets under management, as reported by Brazil’s capital markets association Anbima, Vinland follows the trend of Brazilian hedge funds establishing a presence in the US, with Kapitalo Investimentos announcing a similar plan last year, and SPX Capital being present in the US since 2017.

Hedge funds snap up stocks at fastest pace in 11 months, Goldman says

In February, hedge funds globally significantly increased their investments in equities, displaying heightened optimism in stock markets, according to a Reuters report. This surge, observed across major regions, marked the strongest monthly inflow into global stocks by hedge funds since March 2023. Global equity markets have been rising for four consecutive months due to anticipated Federal Reserve interest rate cuts and a thriving tech sector.

Goldman Sachs notes hedge funds are taking on more risk, with their gross leverage hitting new record highs. Hedge funds shifted to a net purchase of U.S. stocks for the first time in seven months, driven by increased bets on semiconductor-related equities amid the artificial intelligence boom. Despite this, the largest U.S. companies, including Apple and Nvidia, have seen relatively little change in collective investment this year, as fund managers prefer smaller tech firms. Interest in Asia, particularly Japan, is rebounding.

Hedge fund Balyasny Asset Management announced three new partners. Two are in commodities

Balyasny Asset Management, the multistrategy hedge fund co-founded by Dmitry Balyasny, has announced three new partner promotions according to eFinancialCareers. Wade Clark and Max Zaraisky, both commodities portfolio managers, joined in 2021 from BP and Squarepoint Capital. Clark, focusing on natural gas trading, while Zaraisky, based in London, played a key role in developing Balyasny's data focused commodities trading platform. The third new partner is Steve Brown, a macro portfolio manager in Austin, Texas, praised for using technology to generate high sharpe returns since starting the Austin office in 2017.