Key Takeaways
- • Brevan Howard is launching the MB Macro Fund, an Asia-focused macro strategy set to begin trading by end of Q2 2018, as the firm attempts to reverse recent capital outflows from its flagship Master Fund.
- • The new fund will be managed by Singapore-based trader Minal Bathwal, who has delivered annualized returns of 17.5% since joining Brevan Howard in 2008.
- • Macro funds face a more favorable environment in 2018, driven by rising interest rates, increased equity market volatility, and anticipated policy shifts from the Bank of Japan, reversing the headwinds that caused Brevan Howard's Master Fund to decline more than 5% in 2017.
- • The Asia-focused strategy positions Brevan Howard to capitalize on Asian macroeconomic trends, particularly developments in China's corporate debt situation and potential shifts in Japanese monetary policy.
Summary
Brevan Howard Asset Management, the London-based macro hedge fund co-founded by billionaire Alan Howard in 2002, is launching a new Asia-focused macro fund to address recent performance challenges and capital redemptions. The MB Macro Fund, scheduled to commence trading by the end of the second quarter of 2018, represents a strategic expansion into Asian markets at a time when global macro investing has faced significant headwinds.
The new fund will be managed by Minal Bathwal, a Singapore-based trader with a strong track record at the firm. Since joining Brevan Howard in 2008, Bathwal has generated annualized returns of 17.5%, according to sources familiar with the firm. His appointment to lead a standalone Asia-focused strategy underscores management's confidence in regional expertise as a source of alpha generation.
The timing of the launch aligns with an improving macro environment. Brevan Howard's flagship Master Fund, managed by Alan Howard and other senior portfolio managers, fell more than 5% in 2017—a period characterized by central bank stimulus that suppressed market volatility and challenged traditional macro strategies. However, strategists anticipate a more favorable backdrop for macro funds in 2018, driven by rising interest rates across developed markets and a resurgence of equity market volatility. Additionally, speculation is building that the Bank of Japan may signal the beginning of an eventual exit from its long-standing stimulus program, creating potential trading opportunities in currency and rate markets.
Asia represents a critical node in global macroeconomic trends. An easing of concerns over China's corporate debt levels provided support for stocks in 2017, and the region is expected to remain central to worldwide economic developments. The Asia-focused strategy allows Brevan Howard to position itself where macro catalysts are likely to be most pronounced, while the London-based firm works to stabilize its asset base and rebuild investor confidence after a challenging year for broad-based macro strategies.
The new fund will be managed by Minal Bathwal, a Singapore-based trader with a strong track record at the firm. Since joining Brevan Howard in 2008, Bathwal has generated annualized returns of 17.5%, according to sources familiar with the firm. His appointment to lead a standalone Asia-focused strategy underscores management's confidence in regional expertise as a source of alpha generation.
The timing of the launch aligns with an improving macro environment. Brevan Howard's flagship Master Fund, managed by Alan Howard and other senior portfolio managers, fell more than 5% in 2017—a period characterized by central bank stimulus that suppressed market volatility and challenged traditional macro strategies. However, strategists anticipate a more favorable backdrop for macro funds in 2018, driven by rising interest rates across developed markets and a resurgence of equity market volatility. Additionally, speculation is building that the Bank of Japan may signal the beginning of an eventual exit from its long-standing stimulus program, creating potential trading opportunities in currency and rate markets.
Asia represents a critical node in global macroeconomic trends. An easing of concerns over China's corporate debt levels provided support for stocks in 2017, and the region is expected to remain central to worldwide economic developments. The Asia-focused strategy allows Brevan Howard to position itself where macro catalysts are likely to be most pronounced, while the London-based firm works to stabilize its asset base and rebuild investor confidence after a challenging year for broad-based macro strategies.
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