Brevan Howard avoided losses on the currency market turmoil after the Swiss National Bank surprisingly abandoned the cap on the Swiss franc against the euro.
The decision sent the franc 30% higher against the euro (the biggest one-day move in a developed market currency), which resulted to staggering losses among hedge funds, pension funds and other entities.
Big losers on Swiss franc
FXCM, the largest retail foreign-exchange brokerage in the United States was one of the hardest hit by the situation.
At this year's SALT New York conference, Jean Hynes, the CEO of Wellington Management, took to the stage to discuss the role of active management in today's investment environment. Hynes succeeded Brendan Swords as the CEO of Wellington at the end of June after nearly 30 years at the firm. Wellington is one of the Read More
Some of the hedge funds negatively impacted by Wiss franc turmoil were Comac Capital, which is returning money to investors after losing 8% of its portfolio value and BlueCrest Capital Management, which closing the doors at one of its funds.
Marko Dimitrijevic of Everest Capital will also close its largest fund.Fortress Investment Group’s Macro Fund lost 7.64 percent last week.
Brevan Howard reduced negative bet on the Swiss franc
The global alternative investment manager was unaffected by the turmoil because reduced its negative bet on the Swiss franc shortly before the currency surged, according to report from the Wall Street Journal based on information familiar with the situation.
According to the report, Brevan Howard Master fund, which is managed by Alan Howard, had been betting against the Swiss franc for several months. The fund was projecting that the Swiss franc would decline while the U.S. dollar would go up.
The fund bet was proven profitable from March 2014 to early January as U.S. dollar surged 15% against the Swiss franc due to speculations that the benchmark interest rates in the United States will increase.
According to the source, Brevan Howard reduced its bet significantly earlier in January. In fact, the fund gained 0.8% last week. One person who saw the numbers said the fund gained 1.9% this year.
Brevan Howard performance
Brevan Howard invests in bonds, currencies and interest rates to take advantage of the economic trends around the world. In a letter sent to investors, the fund reported 12.2% gains in 2011, 3.9% the following year and 2.7% in 2013.
Last year, Brevan Howard recorded its first negative year. The global alternative investment manager reported 0.8% losses. The firm lost money during the first six months of 2014.
Separately, Brevan Howard settled its dispute with its former star trader Chris Rokos. The firm also decided to support the new hedge fund that will be established by Rokos.
In a joint statement, the firm indicated that it will take a financial interest in Rokos’ new venture, but it did not disclose details regarding the investment. “Chris is an exceptional trader. This new relationship is one from which everyone will benefit,” said Howard.