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Nomura rounds up markets’ biggest misses in 2016

Forecasting markets a year in advance is never easy, but with “year-ahead investment themes” season well underway, Nomura has provided a handy reminder of quite how difficult it is, with an overview of markets’ biggest hits and misses (OK, mostly misses) from the start of 2016. The biggest miss among analysts, according to Nomura’s Sam […]

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Categorized | Financial

Rokos eclipses his old Brevan hedge fund

Posted on September 25, 2016

Chris Rokos

Chris Rokos

In less than a year since the launch of his eponymous hedge fund, Chris Rokos, the former star trader at Brevan Howard, is outperforming his former colleagues with returns of about 8 per cent in 2016.

His Rokos Capital macro fund was up as much as 10 per cent at one stage this year — a marked improvement on Brevan, whose main fund, managed by Alan Howard, was down about 2.3 per cent for the year, as of the end of July.

    Mr Rokos was also one of the few to profit on trading volatility following Britain’s vote to leave the EU. He was up about 2 per cent after the June referendum.

    Some of the biggest established names in macro trading — Brevan, Louis Bacon’s Moore Capital, Andrew Law’s Caxton Global and Paul Tudor Jones’s Tudor Investment Corp — have struggled this year while newer macro funds such as Rokos Capital and Guillaume Fonkenell’s Pharo Management have performed better. According to Hedge Fund Research, a data provider, small and midsized managers have outperformed larger, established managers across all strategies this year.

    Mr Rokos, the “R” in the Brevan acronym, left the hedge fund in 2012 after helping it to generate $4bn in trading profits since its start in 2003. He was paid about $900m during that period.

    A founding partner of Brevan, he sued the hedge fund the following year in order to exit a partnership agreement that barred him from starting his own fund for another five years. The case, filed in Jersey, settled in early 2015, and Mr Rokos’s new fund began trading in October. As part of the settlement, Brevan Howard took a stake in Rokos’s fund.

    The launch was the largest of the year in Europe and one of the most closely followed because of Mr Rokos’s history of success. He quickly raised about $3.5bn from investors including Blackstone and soft-closed so as not to grow too rapidly.

    Rokos Capital, based on Savile Row, has grown to about 60 employees. Its splashiest hire so far was Seth Carpenter, a former assistant secretary of the US Treasury and a top adviser to Treasury secretary Jack Lew.

    The only bigger hedge fund launch in the last year was from Scott Bessent, George Soros’s former chief investment officer. His Key Square fund launched with $4.5bn around the start of the year.

    Mr Rokos’s success and Brevan’s struggles come during a difficult year for macro hedge funds, which seek to anticipate global economic trades and profit on them through trading currencies and interest rates. Hedge Fund Research’s macro index is up 2.09 per cent this year, underperforming the industry across all strategies, which is up 3.46 per cent.

    Mr Rokos, an art collector and influential Tory donor, lives in London. He did not respond to a message seeking comment.