- Model incorporates central bank actions and other factors
- New firm also creates two strategies using ETF portfolios
Stephen Cucchiaro, who helped build Windhaven Investment Management into a more than $19 billion asset manager, has started a firm that runs a macro hedge fund.
3EDGE Asset Management, which began this month, seeks to identify the impact of factors such as central-bank policies on global markets in its hedge fund, which bets with exchange-traded funds and derivatives, Cucchiaro said in an interview at his office in Boston. The firm, which oversees $50 million mostly from Cucchiaro, also runs two separately managed accounts made up of ETF portfolios that rely on the same model as the fund.
Cucchiaro, 63, is starting the new strategy after a difficult year for macro traders in which Fortress Investment Group LLC, Bain Capital and BlackRock Inc. wound down funds. 3EDGE will buy into asset classes and geographies it considers undervalued and at the beginning of a long upward cycle, he said. The firm is positioned defensively, with a large allocation to cash, because of the flattening of the U.S. yield curve, the Federal Reserve’s attempt to normalize interest rates and expectations of changing investor behavior.
3EDGE’s managing partners include Robert Phillips and DeFred Folts III, who worked with Cucchiaro at Windhaven and its predecessor. Folts was chief investment strategist at Windhaven, while Phillips oversaw the firm’s investment modeling. 3EDGE also hired Mark Szigety, who was senior vice president of asset allocation and risk analytics at Harvard Management Co.
Windhaven was known for managing portfolios of ETFs. Cucchiaro founded the firm in 1994 and gathered more than $4 billion when Charles Schwab Corp. acquired it in 2010, changing the name to Windhaven from Windward. In June 2014 he left Windhaven, which managed $12.8 billion as of Sept. 30.