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Hugh Hendry Closes Shop Amid “Almost impossible” Environment For Small Funds

By Jacob Wolinsky. Originally published at ValueWalk.

Hugh Hendry is closing shop – the famous UK fund manager has seen his assets go down to $116M for the firm and only $30M for the flagship macro hedge fund- below is an excerpt from an email which the eccentric hedge fund manager just sent to investors.

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Update 6:25PM EST Hugh Hendry has recorded an interview today where he discusses the hedge fund industry see it embedded below



Please see attached Commentary and Performance Attribution Report.

Unfortunately, as alluded to in the Commentary, we have made the difficult decision to close the Fund.

We would very much like to thank you for your support during the last 15 years, and leave you with our final thoughts as to where global markets go from here.

A formal notification has been sent to all registered account holders providing further detail in relation to the redemption process – please do let me know should you have any further questions in this regard.

Joe Rouncefield

Eclectica Asset Management LLP

See an excerpt from the letter below

…………….

What if I was to tell you I wasn’t bearish on anything? Is that something you would be interested in?

It wasn’t supposed to be like this and it is especially frustrating as nothing much has gone wrong with the economy over the summer. If anything we feel 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 synchronised economic momentum and I can’t see it ending for some time. It’s just that our 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; that and the increasing regulatory burden which makes it almost impossible to manage small pools of hedge fund capital today. Like I said, it wasn’t supposed to be like this…

…………

But let me bow out by sharing my team’s views. For the implications of a sustained bout of economic growth are good for you. It’s good because it should continue to underwrite a continuation in the positive performance of global equities. I would stay long. It’s also good because I can’t see interest rates rising abruptly to interrupt the upward path of equities. And commodities have already acknowledged the upturn in the fortunes of the global economy and are likely to trend higher still. That’s a lot of good news.

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 hedge 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.

………..

Sadly I will be unable to participate with such trades during the next upheaval in global markets with The Eclectica Fund but I hope that this commentary has at least roused you into contemplating scenarios that are presently deemed less plausible.

It remains only that I thank you for the great honour of having been responsible for managing your capital and to wish you all great financial fortune.

The post Hugh Hendry Closes Shop Amid “Almost impossible” Environment For Small Funds appeared first on ValueWalk.

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