Three top staff leave macro hedge fund MarkhamRae after assets plunge

LONDON (Reuters) – At least three top staff recently left London-based hedge fund firm MarkhamRae, which has underperformed its peers and saw three of its biggest investors pull out almost $300 million.

Head of Distribution Kerry Duffain, Cameron Christie, a partner, and Janos Hawkins, senior systematic portfolio manager, all left in July, filings with Britain’s Financial Conduct Authority (FCA) showed.

As a result, the firm now has only eight staff registered as portfolio managers or senior traders with the FCA, compared to 14 in July 2017.

MarkhamRae, a so-called ‘macro’ fund, which uses traders and computer algorithms to bet on macroeconomic events via interest rates and currencies, has bucked an improved outlook for rivals after investors increased investment in the strategy.

Top investor BNP Paribas (BNPP.PA) and a British government pension scheme both pulled their cash last year, blaming the fund’s underperformance.

In 2015 the hedge fund, co-founded by former executives at BNP Paribas and BlueCrest Capital Management, managed $600 million firm-wide, according to former investor Strathclyde Pension Fund. That placed it in the top-20 largest macro hedge funds in Britain, according to industry tracker Preqin.

But its assets dropped off.

In a June 2018 report, HSBC said the MarkhamRae’s human-led macro fund had $99 million in assets, compared to $376 million in June 2017.

The fund lost 2.7 percent in the year to June 1 after falling 14 percent in 2017, according to data compiled by HSBC.

By contrast, rivals averaged losses of 0.7 percent in the first six months of 2018 after gains of 3.4 percent in 2017, data from researcher eVestment showed.

Duffain, Christie and Hawkins all failed to respond to requests for comment by Reuters, while MarkhamRae Chief Executive Officer and Chief Risk Officer Jonathan Martin declined to comment on the departures in an email to Reuters.

Macro funds have taken in $13 billion in assets globally this year, Eurekahedge data shows, as investors bet that higher market volatility due to diverging interest rate outlooks in Europe and the United States will lead to better returns.

BNP Paribas in October 2017 pulled a 200 million euro ($234 million) investment it made in MarkhamRae’s at inception in 2011, a source familiar with the matter told Reuters.

The London Borough of Enfield Pension Fund then opted to take out 9 million pounds($12 million) late last year after first making the investment in December 2016.

Minutes from the November 2017 pension committee meeting showed the decision to exit was due mainly to continued poor performance and BNP Paribas’s redemption.

MarkhamRae also shut its trade finance fund in March, a spokesman for the Strathclyde Pension Fund told Reuters. The Scottish local government scheme said its 40 million pound investment in the fund was never deployed.

($1 = 0.8560 euros)

($1 = 0.7672 pounds)


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