Key Takeaways
- • Nancy Zimmerman's Bracebridge Capital has grown from $5.8 billion to $10.3 billion in assets over four years, delivering approximately 10 percent annual returns since inception and establishing itself as the world's largest hedge fund run by a woman.
- • Yale University's endowment holds a $1 billion position in Bracebridge Capital, representing one of its most profitable investments; the original $50 million stake was made in 1994 by David Swensen and Thomas Steyer of Farallon Capital Management.
- • Bracebridge posted a 2 percent gain in 2015, outperforming the hedge fund industry average of 0.6 percent, while industry titans Bill Ackman (Pershing Square) lost 20.5 percent and David Einhorn (Greenlight Capital) lost 20.4 percent.
- • The fund employs a leveraged fixed-income arbitrage strategy focused on exploiting pricing differentials in bond markets with strict risk management, generating only eight losing months since 2009.
Summary
Nancy Zimmerman's Bracebridge Capital has emerged as one of the hedge fund industry's most consistent performers, delivering steady returns while larger, more prominent competitors faced significant losses in 2015. The Boston-based fund has expanded its assets under management from $5.8 billion four years prior to $10.3 billion as of early 2016, with a track record of approximately 10 percent annual returns since its inception. This growth trajectory makes Bracebridge the largest hedge fund globally managed by a woman, a distinction that underscores Zimmerman's success despite the fund's deliberately low public profile.
David Swensen, the renowned manager of Yale University's $25.6 billion endowment, has been among Zimmerman's most prominent supporters since 1994, when he and Thomas Steyer of Farallon Capital Management initially committed $50 million to the fund. That early backing has proved exceptionally valuable; Yale's current position in Bracebridge is valued at approximately $1 billion, making it one of the endowment's most profitable investments. Swensen attributes the fund's success to Zimmerman's "leveraged strategy to exploit pricing differentials in the fixed-income world with an obsessive focus on risk," highlighting the disciplined approach that has underpinned consistent performance.
Bracebridge's 2015 results demonstrate the competitive advantage of this methodical strategy. The fund posted a 2 percent gain despite significant market headwinds that included a Chinese currency devaluation in August, a rally in European government bonds, and steep oil price declines. This performance exceeded the hedge fund industry average of 0.6 percent for the year. By contrast, high-profile activist managers suffered substantial losses: Bill Ackman's Pershing Square Holdings declined 20.5 percent, largely due to positions in Valeant Pharmaceuticals, while David Einhorn's Greenlight Capital fell 20.4 percent on poor stock selections, marking only the second losing year in its history.
The fund's risk management discipline is evident in its historical performance; Bracebridge has recorded only eight losing months since 2009, a remarkable consistency that reflects the robustness of its fixed-income arbitrage approach. Despite managing over $10 billion in assets, Zimmerman has maintained the fund's discretion and avoided extensive media attention, distinguishing Bracebridge from competitors who regularly court institutional investor interest.
David Swensen, the renowned manager of Yale University's $25.6 billion endowment, has been among Zimmerman's most prominent supporters since 1994, when he and Thomas Steyer of Farallon Capital Management initially committed $50 million to the fund. That early backing has proved exceptionally valuable; Yale's current position in Bracebridge is valued at approximately $1 billion, making it one of the endowment's most profitable investments. Swensen attributes the fund's success to Zimmerman's "leveraged strategy to exploit pricing differentials in the fixed-income world with an obsessive focus on risk," highlighting the disciplined approach that has underpinned consistent performance.
Bracebridge's 2015 results demonstrate the competitive advantage of this methodical strategy. The fund posted a 2 percent gain despite significant market headwinds that included a Chinese currency devaluation in August, a rally in European government bonds, and steep oil price declines. This performance exceeded the hedge fund industry average of 0.6 percent for the year. By contrast, high-profile activist managers suffered substantial losses: Bill Ackman's Pershing Square Holdings declined 20.5 percent, largely due to positions in Valeant Pharmaceuticals, while David Einhorn's Greenlight Capital fell 20.4 percent on poor stock selections, marking only the second losing year in its history.
The fund's risk management discipline is evident in its historical performance; Bracebridge has recorded only eight losing months since 2009, a remarkable consistency that reflects the robustness of its fixed-income arbitrage approach. Despite managing over $10 billion in assets, Zimmerman has maintained the fund's discretion and avoided extensive media attention, distinguishing Bracebridge from competitors who regularly court institutional investor interest.
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.