The $32.6 billion hedge-fund giant Brevan Howard Asset Management LLP emerged as one of the few firms to buck the trend of dismal returns in 2011. The firm’s $26.4 billion Brevan Howard Master Fund Ltd. returned a solid 10.8 percent for the 10 months ended Oct. 31, ranking the fund No. 20 in the Bloomberg Markets ranking of the 100 best-performing hedge funds.
In total, Brevan Howard had four best-performing funds in the top 100. The others include the $1.7 billion Brevan Howard Asia Master Fund Ltd., at No. 31 with a 7.2 percent return; the $1.3 billion Brevan Howard Multi- Strategy Master Fund Ltd., tied at No. 43 with a 5.5 percent return; and the $2 billion Credit Catalysts Master Fund Ltd., tied for No. 74 with a 3.2 percent return, according to Bloomberg.
Brevan Howard co-founder Alan Howard has a long history of avoiding risks. Over a 25-year career as a hedge fund manager, he has successfully navigated through the bond market rout of 1994, the collapse of Long-Term Capital Management LP in 1998, and the recent financial meltdown of 2008.
In fact, since inception, his Master Fund has never posted a negative calendar-year return. Its Sharpe ratio of 1.96 means that, on a risk-adjusted basis, it has generated more than four times the return of the S&P 500 Index.
“When he senses danger, he is not afraid to enforce his view very forcefully,” says Zoeb Sachee, head of European government debt agency/covered bonds at Citigroup Inc. in London, who worked with Howard at Salomon. “The speed of exit was quite remarkable.”
All the more impressive coming in a year when the average hedge fund fell 2.8 percent according to Bloomberg data (others have it pegged at even more). The success of Brevan Howard’s funds are said to be a result of the firm’s pessimistic macroeconomic outlook. While other firms were predicting a mild recovery, Howard forecast a recession, and piled investments into U.S. Treasures, U.K. gilts and German bunds for safety. This positioned their interest-rate exposure to take advantage of falling yields.
Brevan Howard’s headquarters are located in Geneva, Switzerland. It is one of several U.K. hedge fund firms to relocate there when Britain announced plans to raise taxes on top income earners.
What’s your take? Are you familiar with Brevan Howard? Would you consider taking a hedge fund job at a European firm? Add your comments below.
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A hedge fund is a fund that uses more non-traditional investing strategies to try to reduce volatility and risk, while attempting to preserve capital and deliver positive returns under ALL market conditions. This last part is the most notable difference from traditional investments. Regardless of whether the market is moving up or down, a hedge fund strives to capture positive returns.
Because of the use of non-traditional strategies, it takes a few more skills and characteristics to make your hedge fund experience a positive one. Here are the basics for those looking to land entry level hedge fund jobs:
Big, Balanced Brain – most investing is a numbers game, but hedge funds require the use of both the left and the right sides of the brain. The left side of the brain is the logical, thinking side most often associated with reasoning, speech, writing, and numbers/math. The right side is the creative side associated with 3-D forms, art, music, creativity and imagination. Hedge fund investing requires reading for specific details and facts (left brain), but also skill in showing relationships between ideas (right brain).
Big Wallet – historically, hedge funds have required upwards of $1 million as a minimum investment. There are funds lowering their minimums to $250,000 or less, but this is still more than the average investor has at his or her investing disposal.
Big Stomach – obviously I’m not being literal here, otherwise the U.S. would lead the world in successful investing, but I digress. Investing in the stock market at any level takes nerves of steel, but especially when you are working with large sums of money in non-traditional investment strategies. You must be disciplined and diligent to execute the hedge fund strategies to extract their maximum potential performance.
As for working in the industry, hedge fund managers are highly experienced, specialized professionals. If you are looking to enter this field, here are a few ideas to get you started:
Consider getting your MBA from a well-respected Business school – having a solid educational foundation will demonstrate business and finance skills that will be an asset to the fund. You will have learned everything from global economics and finance, to marketing and operations.
Get some banking experience – Hedge funds look for people that have a background in the financial industry, but also have client relationship management experience, good communication skills, and can demonstrate strength in teamwork, organization, quality, and accuracy.
Build your network – often talked about, rarely done well. People in hedge funds are notorious for keeping their networks small. To get in you need to identify people that will help support your efforts. Start with current associates, bosses, co-workers, and vendors/wholesalers with whom you already have a relationship. Ask if they know anyone in the hedge fund world. If so, would they be willing to introduce you? You can also attend hedge fund networking events or conferences. Talk to as many people as possible to identify people that might be able to shepherd you or serve as a mentor as you pursue opportunities that interest you.
Like any other specialized job search, employment with a hedge fund will take time. You will have to build relationships, as well as demonstrate your knowledge and skills as part of creating the building blocks for lasting success.
About the Author:
Debra Wheatman, CPRW, CPCC, is a Professional Resume Writer and Career Coach with nearly two decades experience working with professionals in finance, management consulting, legal, and technology.
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