Macro hedge funds, using strategies designed to take advantage of global macroeconomic trends, had a good start but have ended up as a colossal dud. BlackRock, the largest global asset manager, is finally admitting it was wrong, and is closing down its global macro hedge fund following large losses and massive investor redemptions.
The BlackRock Global Ascent was already down 9.4% so far this year, based on data from an October investor document, which would be its worst performance since it was founded in 2003.
According to an anonymous source close to the fund that spoke to Bloomberg recently, the BlackRock macro fund had $4.6 billion in assets two years ago, but was down to under $1 billion as of November 1st.
Details on closure of BlackRock Global Ascent macro fund
BlackRock is more well-known for its ETFs and mutual funds, and has apparently decided to get back to basics, as the firm will join money managers such as Fortress Investment Group and Bain Capital that have also closed macro funds over the last few months. Financial markets have been hammered by wild swings and unusual events this year, such as unexpected surge in the Swiss franc in January, a rally in European government bonds in April, a surprise devaluation of the Chinese yuan a couple of months ago, as well as huge drops in oil and gold prices and a third-quarter swoon in Wall Street darling equities.
The Global Ascent fund was managed by Paul Harrison, and according to marketing materials, sought to profit from inefficiencies in global currency, fixed income, credit, equity and commodity markets.
Of interest, investor documents reviewed by Bloomberg showed fund was off by 12.3% in the first quarter of this year, and saw the losses mount to almost 15% through May, before some improvement over the last few months.
Harrison had been the lead manager on the Global Ascent team since 2010. The sources also note that the majority of the fund’s stakes have already been sold. It is also probable that several of the fund’s managers will join other investment teams in the BlackRock family.
BlackRock released an email statement Wednesday noting: “We believe that redeeming the Global Ascent Fund was the right thing to do for our clients, given the headwinds that macro funds have faced.”
Macro has had a tough year, and the latest hedge fund news adds to the growing list of macro hedge funds which have closed shop in 2015.
See an incomplete chart of the closures below (via Bloomberg).