(Bloomberg) — Brevan Howard Asset Management is enjoying a banner February after its traders benefited from the European Central Bank’s surprise signal that it could start raising rates as soon as this year.
The firm had one of its best-ever days of trading on Feb. 4 as complex option bets on short-term euro rates paid off, people with knowledge of the matter said. One of the notable winners was Brevan Howard’s star trader Fash Golchin who rebounded after his record annual loss last year, according to the people and an investor document seen by Bloomberg.
Other money managers such as Louis Basger, Minal Bathwal and Alfredo Saitta as well as the firm’s multi-trader Alpha Strategies platform also gained, one of the people said.
Traders scrambled to bet that the ECB will end years of negative interest rates in 2022 after its President Christine Lagarde declined to rule out a hike this year to contain the fastest inflation since the euro was created. The global pile of sub-zero debt shrunk by $1.5 trillion in the space of a day after her Feb. 3 statement. Macro hedge funds lost about 0.3% in January, according to Bloomberg data.
Brevan Howard’s flagship fund has risen almost 4% for the year-to-date through Feb. 11, with the vast majority coming in the first eleven days of this month, according to a letter seen by Bloomberg. Golchin, who runs his own fund and manages part of the firm’s $8.3 billion Master Fund, gained 8%.
A spokesman for the Jersey, Channel Islands-based investment firm, which managed about $18.4 billion in assets at the end of last year, declined to comment.
Brevan Howard is rebuilding under Chief Executive Officer Aron Landy after years of mediocre returns at the firm saw its assets crash to about $6 billion from a peak of more than $40 billion. The firm, co-founded by billionaire Alan Howard, has given separate funds to its star traders and is also building a digital assets unit.
Macro hedge funds are seeing their fortunes turn after a decade of sub-par returns as central banks move to raise rates and inject market volatility. Firms such as Haidar Capital Management, Trend Capital Management and Castle Hook Partners were some of the biggest winners in the industry last month.
Brevan Howard’s traders had been betting on higher rates since last year. While the trades failed to fire in 2021 with the firm’s main fund ending the year up just about 2%, they have started to pay off now. Golchin, who specializes in multi-asset macro trading, made money on euro rates trading as well as U.S. rates, commodities and precious metals, one of the people said.
The money manager, who is among Brevan Howard’s star traders, recorded a loss of about 9% last year. Golchin was key to record gains at the firm in 2020, when he made about 60%.
(Updates with macro hedge fund returns in fourth paragraph)
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