Paul Tudor Jones Clients Pull 15% From Main Hedge Fund

  • BVI client assets sink to $3.6 billion, half value of year ago
  • Billionaire macro manager’s fund is down 1.9 percent

Paul Tudor Jones

Photographer: Michael Nagle/Bloomberg

Paul Tudor Jones’ investors are increasingly deserting him.

The billionaire macro manager who helped give rise to the hedge fund industry saw clients pull about 15 percent of their assets from his main fund in the second quarter, according to investors who asked not to be identified discussing private information. That’s left client assets at about $3.6 billion, almost half the value a year ago.

The withdrawals are a blow to Jones -- the Memphis native and former cotton trader who started Tudor Investment Corp. almost four decades ago -- and exemplify the asset bleed hurting the biggest names in the business, including Alan Howard and John Paulson. As clients flee amid investment losses, Jones has taken steps to revive his firm, including reducing fees and headcount.

Jones’ main BVI Global Fund is down 1.9 percent this year through July 21, according to a client document. The fund also manages money for Jones and his employees. Patrick Clifford, a spokesman for Tudor, declined to comment.

Jones, 62, and his brethren are experiencing a punishing shift. The old guard who shot to fame in the 1980s and 1990s are foundering, while a younger set of managers are making money, hiring and attracting new investments. The veterans are finding it’s no easy feat to replicate stand-out profits of yesteryear, when markets were more opaque and less efficient.

Macro Meltdown

Macro hedge funds have posted their worst first half since 2013, losing 0.7 percent, and on average returned about 1 percent annually in the past five years, according to Hedge Fund Research Inc.

Aside from BVI Global, Tudor also manages a fund tied to the performance of multiple teams of managers, an event-driven portfolio, and individual accounts. In total, the firm now has just under $8 billion in assets, compared with $14 billion in June 2015.

Read More: John Paulson Goes From Hot to Not as Most Client Money Vanishes

As revenue declines at Tudor, Jones last month sold the firm’s 43-acre Greenwich, Connecticut, headquarters’ property. Tudor said it plans to move to a location in lower Fairfield County that’s more convenient to New York City, where the firm has offices. It also has outposts in London and Singapore.

Tudor employees have also defected along with clients. Global rates money manager Adam Grunfeld quit in May after nine years and is set to join Element Capital, the macro fund run by 42-year-old Jeff Talpins. Zorin Finkelsen and Dudley Hoskin left to join Balyasny Asset Management. Other departures have included risk-management chief Joanna Welsh, who departed for Ken Griffin’s hedge fund Citadel last year.

Separately, money manager Dan Pelletier took a sabbatical to design quantitative tools for trading, people with knowledge of the firm said. Pelletier, who had worked at Tudor for nine years, couldn’t be reached for comment.

Jones a year ago dismissed 15 percent of his employees, a rare move for the Tudor founder, who’s known for his loyalty toward staff. He has told clients he will manage a larger chunk of their money and has encouraged his portfolio managers to take more risk. Jones has also leaned on quantitative tools to help with trading, including introducing technology that replicates the bets of his best managers.

After decades of being one of the most expensive hedge funds, Tudor has this year reduced its management fee to between 1.75 percent and 2.25 percent, while taking a 20 percent cut in profits. The firm had once charged management fees as high as 4 percent for some clients, and a performance fee of as much as 27 percent for others.

Outsized Returns

Well-liked by his employees and across the industry, Jones didn’t amass the level of assets that macro rivals Ray Dalio and Howard did. But he was a trailblazer. Jones profited from the October stock market crash three decades ago and became one of the famed macro traders in the business.

Jones is also well known for his Robin Hood Foundation whose celebrity-studded charity gala in New York raises tens of millions of dollars for poverty-fighting charities. He’s also founded a non-profit organization called JUST Capital. Last year, after living in Connecticut for decades, Jones moved to Florida which has no income tax.

Before the financial crisis, investors were more than happy to go along for the ride with Jones. His main BVI Global Fund produced average annual gains of about 26 percent from 1987 through 2007, according to investor documents. But from 2008 through last year, the annual average return has slid to about 4.7 percent.

Like many of his peers, Jones has banked on macro making a comeback. Last year he said central bank policies, which have suppressed volatility and encouraged more government debt, will backfire and macro strategies will profit when the debt bubble bursts. So far that hasn’t materialized.

For more on Jones’ views on the markets, click here

Still, it’s not all doom and gloom for Jones. A new event-driven fund Tudor started last year, run by Emil Dabora, that wagers on mergers, spinoffs and other corporate changes has gained 9.3 percent in the first five months of the year.

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