Macro Hedge Fund to Return Profits to Clients After Surging 12%

  • Guillaume Fonkenell’s Pharo fund to return money in September
  • Macro funds focusing on emerging markets beat rivals this year

Hedge fund manager Guillaume Fonkenell is returning profits to investors from his $5 billion macro fund after it beat rivals this year.

The Pharo Macro Fund, which climbed about 12 percent in the first half, will return those gains to clients on Sept. 1, Fonkenell said in an email. His firm told investors that the peak capacity for the trading-oriented fund was between $4 billion and $5 billion, and it stopped accepting new money three years ago, Fonkenell said.

Hedge funds sometimes return part of their capital when a surge in assets under management triggers concern that overseeing too much money could harm returns. Pharo Management UK, which Fonkenell started in 2000 and manages $8.2 billion, is a macro hedge fund that focuses on emerging markets. It’s among the firms including Glen Point Capital that have made money this year even as peers betting on broader economic trends had their worst first half since 2013.

“The opportunity set in macro emerging-market strategies continues to be unusually attractive,” Fonkenell said. “Fundamentals paint a very diverse macro picture across countries. Central banks are very active. Markets are vibrant and volatile. We expect this environment to persist for a while.”

Read more: Macro Managers’ Micro Returns Cast Pall Over Caxton, Brevan

Pharo’s decision to return money contrasts with well-known macro hedge funds such as Brevan Howard Asset Management and Tudor Investment Corp., which have been hurt by client redemptions after years of poor performance. That’s forced some of the firms to reduce fees and cut jobs.

"This is a manager who is more dedicated to producing returns than asset gathering,” Hilmi Unver, head of ultra high net worth and family offices at Swiss money manager Notz Stucki & Cie, said of London-based Pharo. Returning money allows them to be more flexible in their trading, he said.

Macro hedge funds lost an average of 0.7 percent in the first six months after a 0.9 percent decline in June, according to data compiled by Hedge Fund Research Inc.

Fonkenell’s Pharo Gaia Fund, which manages about $2.7 billion and returned 16.6 percent this year through June, will take in another $1 billion from clients in September, he said.

    Before it's here, it's on the Bloomberg Terminal.