Brevan Howard’s $2.7 billion emerging markets hedge fund cut risk and sold positions after getting crushed by the EM slump, Bloomberg reports.
Managed by 38-year-old Geraldine Sundstrom, the fund fell about 5% this month, totaling 11% in yearly losses, a source told Bloomberg.
Brevan Howard lowered the value at risk, or VaR, for the Emerging Markets Strategies Master Fund by 50 per cent in May and at least 30 per cent more this month after losses climbed to almost $300 million this year, said the people who asked not to be identified because the firm is private. VaR, an estimate of potential trading losses, can be cut by selling investments and reducing leverage.
The rout in EM began last month when Fed Chairman Ben Bernanke spooked investors by hinting he might scale back the Fed’s asset buying program sooner rather than later.
Emerging markets like Brazil and Turkey have been getting absolutely punished partially thanks to unease about where the Fed stands.
Sundstrom reportedly sold EM holdings ahead Bernanke’s FOMC statements yesterday.
Bloomberg reported that Brevan’s master fund, with nearly $28 billion in assets, has never recorded an annual loss since starting in 2003.
Sundstrom has worked at the firm since 2007, and it hasn’t always been tough times. Her fund posted positive returns in 2008 during the financial crisis.
A source told Bloomberg that Brevan has no plans to close Sundstrom’s fund, though the firm is “known for its discipline in quickly and aggressively cutting positions when traders lose money.”
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