Key Takeaways
- • 2024 NAV Performance: BH Macro's Sterling Class shares delivered a 5.86% NAV return, while US Dollar Class shares returned 4.92%, with share price outperformance of 10.63% and 10.61% respectively driven by discount narrowing.
- • Substantial Buyback Programme: The board executed £116 million in share repurchases during 2024, reducing the average discount from 11.1% (December 2023) to 7.8% (December 2024), contributing 0.98% to Sterling class NAV returns and demonstrating accretive capital allocation.
- • Rising Fee Burden: Ongoing charges increased to 2.95% in 2024 from 2.16% in 2023, reflecting 0.74% in performance fees earned by the GBP share class, signaling profitable fund performance but elevated cost structure.
- • Persistent Discount Concern: The board acknowledges that the remaining 7.8% average discount to NAV remains materially above the target 5% threshold, with discount volatility creating additional share price instability that undermines the value proposition of Master Fund investment.
Summary
BH Macro Limited published its 2024 results, demonstrating solid absolute returns alongside strategic share buyback execution that enhanced shareholder value through discount compression. The fund's Sterling Class NAV rose 5.86% during the year, with US Dollar Class shares posting a 4.92% return, reflecting performance from the underlying Brevan Howard Master Fund's global leveraged trading and investment mandate. Share price performance exceeded NAV returns for both classes—10.63% for Sterling and 10.61% for US Dollar—a divergence attributable to the narrowing of the discount to NAV, which moved from 11.1% average in December 2023 to 7.8% by December 2024.
The board's aggressive buyback programme proved strategically accretive, deploying £116 million in repurchases throughout 2024. These repurchases contributed 0.98% directly to the Sterling class NAV return, demonstrating that buying back shares at discount prices enhanced remaining shareholders' economics. This disciplined capital allocation reflects management's confidence in the fund's underlying value while addressing what remains a structural challenge: the persistent discount to NAV. Despite substantial improvement, the board has flagged that a 7.8% average discount remains unsatisfactory over the long term, with the additional volatility created by share price fluctuations between premia and discounts undermining a core investment thesis.
Fee dynamics shifted materially in 2024, with ongoing charges rising to 2.95% from 2.16% in the prior year. This 79 basis point increase was primarily driven by performance fees of 0.74% earned on the GBP share class, reflecting profitable underlying fund performance but highlighting the sensitivity of the fee structure to market conditions. The board remains acutely conscious of the need to maintain discount levels above 5% as a strategic priority, recognizing that persistent wider discounts create undesirable share price volatility that detracts from the long-term investment value proposition of the closed-end vehicle structure.
The board's aggressive buyback programme proved strategically accretive, deploying £116 million in repurchases throughout 2024. These repurchases contributed 0.98% directly to the Sterling class NAV return, demonstrating that buying back shares at discount prices enhanced remaining shareholders' economics. This disciplined capital allocation reflects management's confidence in the fund's underlying value while addressing what remains a structural challenge: the persistent discount to NAV. Despite substantial improvement, the board has flagged that a 7.8% average discount remains unsatisfactory over the long term, with the additional volatility created by share price fluctuations between premia and discounts undermining a core investment thesis.
Fee dynamics shifted materially in 2024, with ongoing charges rising to 2.95% from 2.16% in the prior year. This 79 basis point increase was primarily driven by performance fees of 0.74% earned on the GBP share class, reflecting profitable underlying fund performance but highlighting the sensitivity of the fee structure to market conditions. The board remains acutely conscious of the need to maintain discount levels above 5% as a strategic priority, recognizing that persistent wider discounts create undesirable share price volatility that detracts from the long-term investment value proposition of the closed-end vehicle structure.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.