Billionaire investor Paul Tudor Jones is closing his firm’s Discretionary Macro fund, allowing investors to shift funds into his flagship BVI fund as of Jan. 1, according to an investor letter seen by Bloomberg News.
Co-chief investment managers Andrew Bound and Aadarsh Malde have been canned after the Discretionary Macro fund lost 1.6 eprcent through Nov 3. The S&P 500, meanwhile, was up over 18% during the same period.
Meanwhile, Tudor Investment Corp has had a rough year of withdrawals, losing $500 million from Tudor in the third quarter, leaving the firm’s assets at $7 billion – half the assets under management from just just two years ago.
Tudor Jones will take more of an active role in his remaining BVI fund:
“I will be the largest risk taker and will manage a notional capital account equal to the AUM of the Tudor BVI strategy itself,” Jones said in the letter, referencing assets under management. “This means that my results will have a one-for-one performance impact on Tudor BVI. I relish this challenge.” –Bloomberg
Jones also launched a new $300 million macro fund in October that uses machine-learning algorithms to help with trading decisions.
Low volatility to blame
Jones says “years of central bank monetary easing has suppressed market volatility, hurting macro fund returns and spurring investor withdrawals.”
The low volatility market environment has been an “anathema” to traditional macro funds and is becoming a “dangerous place,” lulling investors into a false sense of complacency, Jones wrote in a separate Nov. 30 market note.
“In the face of a shock, investors may be surprised to find themselves jammed running for the exit,” he wrote. The amount and quality of liquidity is lower than people recognize, and hidden leverage in the market will make a mass exit even more challenging, he said. –Bloomberg
Tudor opened his Discretionary Macro fund in 2012 with $500 million. It had 14 managers who expected to benefit from things such as the European sovereign debt crisis.
Unfortunately, the strategy sucked wind along with other Macro funds, which only gained an average of 3.8% through October – ranking as the worst strategy globally according to Hedge Fund Research, Inc.If you enjoy the content at iBankCoin, please follow us on Twitter