Ex-Goldman Trader’s Macro Hedge Fund Said to Lose 5% in 2016

  • Lim’s Guard made up some of the first quarter’s loss of 7%
  • Guard manages $963 million of assets, down from $1.1 billion

Former Goldman Sachs Group Inc. trader Leland Lim’s macro hedge fund lost 5.1 percent in 2016, even after recovering from steep declines early in the year, according to people with knowledge of the matter.

Assets overseen by Lim’s Hong Kong-based Guard Capital Management declined to $963 million from about $1.1 billion at the beginning of the year, said the people, who asked not to be identified because the information hasn’t been publicly disclosed. Lim’s fund lost 7 percent in the first quarter, when some of its large bets on economic themes backfired, the people said.

Matthew Edwards, Guard’s head of business development, declined to comment.

Funds that make longer-term bets on economic themes by trading in currency, stock, bond and commodity markets struggled to make money for much of the year as central bank intervention muted volatility. Financial markets also reacted to political surprises such as the U.K.’s vote to leave the European Union and Donald Trump’s win in the U.S. Presidential elections in ways that many traders didn’t anticipate.

Investors redeemed $106 billion from hedge funds last year, the largest amount since 2009, according to data provider eVestment, as the industry came under increased criticism for meager returns and high fees. “Investor flows for 2016 resembled an industry in crisis,” the data provider said in a report dated Jan. 13.

Muted Gains

The HFRI Macro Discretionary Thematic Index edged up 0.5 percent in 2016. The Pure Alpha II fund run by Ray Dalio’s Bridgewater Associates and Moore Capital Management’s macro managers fund were among those that trimmed losses toward the end of the year.

Guard is known for taking concentrated directional bets on currencies and interest rates, making its returns potentially more volatile than peers that focus on dislocations between prices of related securities. After losses from long-term investments based on fundamental analysis in the first quarter, the fund switched to a larger proportion of shorter-term tactical trading, contributing to better performance for the rest of the year, the people said.

Lim, Guard’s chief investment officer, was previously co-head of Goldman Sachs’s macro trading team in the Asia-Pacific region outside Japan. Founded in 2014, Guard’s hedge fund returned 10 percent that year and 8.1 percent in 2015.

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