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.
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