Key Takeaways
- • Alan Howard's standalone macro hedge fund (Brevan Howard AH fund) gained 36.7% in May 2018, capitalizing on volatility in emerging markets and European government debt, with year-to-date returns of 44.3%.
- • The $2.3bn fund marks a significant comeback for Howard and the macro trading strategy after years of underperformance driven by central bank intervention that neutralized traditional trading approaches.
- • Howard's previous flagship Brevan Howard vehicles contracted from managing over $10bn as one of the world's largest hedge funds in 2013 to less than $10bn total, but the AH fund's performance signals potential recovery in the macro space.
- • The fund's fee structure—30% performance fee plus 0.75% management fee—positions Howard for substantial personal gains, with year-to-date performance suggesting a significant payout on 44.3% annual returns.
- • Brevan Howard plans to open the AH fund to new allocations from existing Brevan Howard investors, while the separate BH Macro listed vehicle recorded more modest 9.1% net asset value gains year-to-date.
Summary
Alan Howard's standalone macro hedge fund delivered a 36.7% return in May 2018 as it exploited market dislocations across emerging markets and European sovereign debt, according to the Financial Times. The $2.3bn Brevan Howard AH fund, managed directly by the billionaire British investor rather than by a team structure, has generated 44.3% in returns through May, marking a significant inflection point for Howard and a broader signal of potential resurgence in macro trading strategies.
The performance represents a notable reversal after years of challenge in the macro space. Howard and his peers faced prolonged headwinds as aggressive central bank intervention—particularly quantitative easing and low-rate regimes—eliminated volatility patterns that had historically powered macro returns. Brevan Howard's flagship vehicles experienced substantial asset erosion as a result, shrinking from managing over $10bn and ranking among the world's largest hedge funds in 2013 to commanding less than $10bn across all vehicles prior to the AH fund's gains.
The fee arrangement compounds the financial significance of this turnaround. With a 30% performance fee on profits and a 0.75% fixed management fee, Howard is positioned to receive a substantial personal payout from the fund's year-to-date 44.3% return. In a statement, Howard noted satisfaction that "the loyalty and confidence shown by my investors has been rewarded with a very positive result," signaling confidence in the strategy's durability.
Brevan Howard intends to open the AH fund to new allocations from existing investors within the broader Brevan Howard platform who have not yet participated in the standalone vehicle. By contrast, the separately managed BH Macro listed fund, which operates as a master fund structure with multiple traders, recorded more modest 9.1% net asset value gains year-to-date, suggesting the divergence in performance between Howard's personal directorship and the broader multi-manager platform.
The performance represents a notable reversal after years of challenge in the macro space. Howard and his peers faced prolonged headwinds as aggressive central bank intervention—particularly quantitative easing and low-rate regimes—eliminated volatility patterns that had historically powered macro returns. Brevan Howard's flagship vehicles experienced substantial asset erosion as a result, shrinking from managing over $10bn and ranking among the world's largest hedge funds in 2013 to commanding less than $10bn across all vehicles prior to the AH fund's gains.
The fee arrangement compounds the financial significance of this turnaround. With a 30% performance fee on profits and a 0.75% fixed management fee, Howard is positioned to receive a substantial personal payout from the fund's year-to-date 44.3% return. In a statement, Howard noted satisfaction that "the loyalty and confidence shown by my investors has been rewarded with a very positive result," signaling confidence in the strategy's durability.
Brevan Howard intends to open the AH fund to new allocations from existing investors within the broader Brevan Howard platform who have not yet participated in the standalone vehicle. By contrast, the separately managed BH Macro listed fund, which operates as a master fund structure with multiple traders, recorded more modest 9.1% net asset value gains year-to-date, suggesting the divergence in performance between Howard's personal directorship and the broader multi-manager platform.
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