Bain to Liquidate Absolute Return Hedge Fund After Losses

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  • Firm cites ``challenging'' environment for macro trading
  • Hedge fund had $2.2 billion under management as of Aug. 1

Bain Capital is liquidating its Absolute Return Capital hedge fund after more than three years of losses, citing a “challenging” environment for macro trading.

The fund, run by Jonathan Goodman and Jeff Woolbert, had about $2.2 billion in assets as of Aug. 1, including $552 million of internal money, according to an investor presentation dated August 2015. The fund was down 13 percent this year through July, which would be its worst year since inception in 2004.

“As you know, the environment for global macro fundamentals-based trading continues to be challenging,” the Boston-based firm told clients in a letter Tuesday. “That factor, combined with the lack of certainty over when a recovery will take hold, led us to conclude that the time was right to return capital to you.”

The fund, which invests in fixed income, equity and commodity markets, lost money in each of the past three calendar years and was down an annualized 8 percent over the past three years through July, a period in which U.S. stocks rose at an 18 percent rate and hedge funds on average returned 6.1 percent a year.

Division’s Assets

Other hedge funds that have struggled this year include Fortress Investment Group’s macro hedge fund, run by Michael Novogratz, which posted a decline of 17 percent through Sept. 25, and John Brynjolfsson’s Armored Wolf, which was hit by the slump in commodities. Brynjolfsson said Monday he’s turning his firm into a family office.

Alex Stanton, a spokesman for Bain, didn’t immediately return a call seeking comment.

Bain’s absolute return fund started as a personal investment vehicle for employees and sits within the capital markets alternative investing business, which oversaw $34.7 billion as of March 31. The division also includes Brookside, a long-short hedge fund unit, and Sankaty Advisors, a credit arm.

Bain Capital, co-founded by former U.S. presidential candidate Mitt Romney, oversees about $75 billion in private equity, venture capital, credit and hedge fund assets. The firm’s private markets division, made up of private equity and venture capital, managed $42.5 billion in assets as of March 31, according to the investor presentation.