Big Names Not Bringing Home The HF Bacon

Investing in hedge fund stars has not resulted in stellar returns this year.

Investing in hedge fund stars has not resulted in stellar returns this year. Bloomberg News reports that funds managed by George Soros, Louis Bacon and Paul Jones have been trailing stock index mutual funds, including the Standard & Poor’s 500 Index. “When an economy is in transition, the markets are often choppy,” David Gerstenhaber of Argonaut Management told Bloomberg News. What the three aforementioned biggies have in common is that they run macro hedge funds, and that strategy has been suffering this year; according to Hedge Fund Research, macros have risen only about 1.8% so far this year, while all hedge funds are hovering around 5.6%. That’s a reversal of fortune from last year when macros were up 6.8%, while another index, outperforming the Vanguard 500 by more than two percentage points. Considering how poorly some hedge funds are faring—Spain’s Vega Select Opportunities Fund and London-based Rubicon Fund Management have slipped 16.7% and 11%, respectively, as of mid-month—the offerings by Bacon, Jones and Soros are doing OK, but not what one would normally associate with them. Bacon’s Moore Global Investment Fund has inched up 2.5%, Soros Fund Management’s Quantum Endowment Fund grew 2.5% and Jones’ Tudor Investment Corp.’s Tudor BVI has an almost-stunning 5.5%. Philippe Bonnefoy of Cedar Partners Investment Management explained it this way to Bloomberg News: “Macro managers have a habit of falling in love with the big-picture thematic view...The problem is that not every theme is linear.” Despite the so-so performance of these HF stars, there are macro managers making much more money: Drake Management’s Global Opportunities Fund has soared 34% this year, and Fortress Investment Group’s Drawbridge Global Macro Fund has topped 10% as of it mid-month. Drake Chief Investment Officer Anthony Faillace credits early bets on falling currency and late bets on fallen energy for contributing to the fund’s success.