How One Hedge Fund Returned 38% Over The Last 10 Months

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Photo: AP

Sabretooth Capital, a hedge fund with $700 million AUM, saw gains of 38% for one of its funds after steep losses last year [via AR].The $50 million macro Yin fund, which launched in October 2010 has netted gains of approximately 38% net of fees during the last 10 months.

That’s because the hedge fund’s principals, Erez Kalir and Craig Perry, bet that the Fed would continue to keep interest rates low.

Lawrence Delevingne at AR explains what they did.

They believed the Fed would keep interest rates near zero longer than expected and that the market was mistakenly pricing in inflation. Kalir and Perry were so convinced they set up a niche hedge fund in October to make precisely that bet, according to a person familiar with the fund.

That bet paid off. The Federal Reserve kept interest rates at ultra-low levels and chairman Ben Bernanke recently suggested interest rates would continue to remain a lower levels.

Now the bet is complete, and the niche Yin fund is closed. 

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