Hugh Hendry's Eclectica Asset Management Said To Close Sep 14 2017 | 11:31pm ET Famed hedge fund manager Hugh Hendry is reportedly shuttering Eclectica Asset Management following performance declines in its flagship fund and a reduction in AUM from more than $1 billion in 2013 to less than $120 million. Hendry, who founded macro-focused Eclectica in 2005, came to prominence after posting gains of 31% in 2008 by betting against financial sector giants in the U.S. and Europe during the financial crisis. News of the closure was first reported by Bloomberg on Thursday, citing an investor letter. The firm’s flagship fund is reportedly down -9.4% for the year to date through the end of August, Bloomberg said. In the investor letter, Hendry noted that formal notification letters had been sent to all registered account holders with details of the redemption process. Further details about when investor capital would be returned were not available. Hendry added that it is “especially frustrating” since the economy has performed well through the summer and he is “more convinced that our thesis of a healing global economy is understated: for the first time in an age, all parts of the world are enjoying synchronized economic momentum.” Nonetheless, the letter continued, the fund’s “substantial risk book became strongly correlated over the short term to the maelstrom of President Trump and the daily news bombs emanating from the Korean Peninsula.” Hendry also echoed a common refrain among hedge fund managers with comparatively small amounts of AUM, noting “the increasing regulatory burden which makes it almost impossible to manage small pools of hedge fund capital today” among the reasons for Eclectica’s closure. Hendry also commented on his broader market views in the letter. “The implications of a sustained bout of economic growth are good…because it should continue to underwrite a continuation in the positive performance of global equities." "I would stay long," he wrote. "I can’t see interest rates rising abruptly to interrupt the upward path of equities." from FINALTERNATIVES
it was fun hearing his speeches very interesting stuff. unfortunately his CAGR was like 2% lol . lotta talk no walk.
Where did you get this 2% from? I believe its more like 7-8%, at least judging by some of his statements
According to the HSBC report, Eclectica's annual return has been 5.97% (not sure what period exactly this refers to, but they seem to have data going back all the way to the 90s). Eclectica's annual volatility has been 19.21% during the same period and max drawdown of 31.94% (in 2008).
I remember in one of his speeches he literally said his CAGR was 7%-8%. Then I went to his own website the same day and looked up the number and it said around 2%; this was sometime ago.
https://www.macrobusiness.com.au/2017/09/hugh-hendry-shuts-eclectica/ This is an excellent summary of his thoughts and I for the most part agree with them. It's well worth a read. I won't paste the whole thing here but this part is pretty blunt and to the point: "But it is bad news for me because funds like mine are required to demonstrate negative correlation with risk assets (when they go up like this I go down…), avoid large drawdowns and post consistent high risk adjusted returns. Oh, and I forgot, macro fund clients don’t like us investing in the stock market for the understandable fear that we concentrate their already considerable risk undertaking. That proved to be an almighty puzzle for a fund like mine that has been proclaiming the stock market as a “safe-ish” bet ever since 2013." It's really tough right now in general for global macro funds. Their demand does not come from people seeking long equity exposure, they can get that easily in a passive index fund. These funds try to look around the world and find trouble, since trouble is usually not correlated with the long and strong equity crowd. But if there is no trouble or dislocations to be found, these funds tend to flounder and generate low to negative returns. Like trend following right now, this is a tough space to be in unless you are just going to index your clients money and tax them on their wealth which is what most charlatans do in this industry. Hey, it makes the wife and kids happy.
Fundamental Macro bets are a form of mega market timing which defy the logic of safe investing. These macro managers call one right move and they become superstars and get heavily funded. It takes 2-3-5 years of constant sub par returns for investors to realize the mistake and bolt out of the fund. Index funds are the safest for long run. 7-8% net goes long ways. Use the taxfree accounts along with employer matching deals and the nest egg grows steady. For the rest of the "high slick" action, Hollywood movies are still there and getting better.
Thats not what they are there for. They are an asset class like any other. You own some real estate, some gold, some equities and whatever else. Wealthy people like to be invested in diversified non correlated assets. They are willing to put up with sub par returns since it might only represent 5% of their assets. That's one of the attractions of bitcoin right now. It appears to have zero correlation to any other asset class. So you put 1% of your money in it. Done. Being long stocks is just one piece of it. If you got long in 1998 and held for 17 years, you didn't make a dime. Timing is everything if you decide to go all in on anything. What diversification does is minimize the importance of timing which for most people is hard to do.
Macro betting market timers are not among the asset classes that offer diversification. Commodity, futures, internationals do that pretty well.