Macro funds are having a very tough year. That trend continued recently as most macro hedge funds (funds trading on macroeconomic themes) were surprised by the weak move by European Central Bank on Thursday.

Making investments assuming a weaker euro and a stronger dollar (given the ECB is loosening monetary policy and the U.S. Fed is widely expected to tighten) has been a very popular move for funds that trade currencies, bonds and stocks on the future direction of global economics.

Fund industry analysts point out the $500 billion macro fund sector has notably underperformed for a couple of years now.

Insiders report that the large majority of major macro hedge funds established positions against the euro before the ECB meeting, but ECB President Mario Draghi disappointed most investors by only cutting the deposit rate to minus 0.3% and a authorizing another six-months of its bond-buying program.

Clearly markets had been expecting more, and the euro zoomed up over 3% against the dollar in a huge move, while government-bond yields skyrocketed and the Stoxx Europe 600 index fell by 3.1%. Friday did not help much as the Stoxx Europe 600 index dropped another 0.4% and the euro was basically unchanged.

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Macro hedge funds crushed last week

Man Group, with an AUM of $76.8 billion, noted online that its AHL Diversified fund was down a shocking 5.1% on Thursday. Man Group would not offer further. cpomment

Tudor lost about 1% on Thursday, an unusually steep loss, in part because of the euro positioning, according to sources who spoke to the Wall Street Journal. Brevan macro funds were also down a large amount, a separate individual familiar with the fund’s performance reported.

Betting against the euro was a very popular position. The U.S. Commodity Futures Trading Commission reports that investments by hedge funds on the euro dropping outnumbered bets on the euro moving by 4.7 to 1 as of the last week of November.

Statement from Kairos Partners CIO

“I think it’s been painful for a lot of people,” commented Michele Gesualdi, CIO of Kairos Partners in London, which manages $8.7 billion and invests in hedge funds. “Pretty much everyone was short the euro. The view was very clear for everyone.”