London-based hedge fund Caxton Associates has chalked a $270m gain this month leverage strategic bets on both US Treasuries and the Japanese yen to boost performance amid recent market volatility, according to a report by the Financial Times.
The report cites investor reports obtained by the FT as revealing that the firm’s Macro fund, overseen personally by CEO Andrew Law, achieved a 3.9% return in the first nine days of August, while its $8.5bn Global fund recorded a gain of 1.1% over the same period.
These profits come during a period of significant global market turbulence, driven by concerns that the US Federal Reserve has been slow to respond with rate cuts amid signs of economic slowdown. US technology giants and Japanese equities were among the hardest hit, while the market’s volatility index soared to levels not seen since the early days of the Covid-19 pandemic.
Caxton, managing a total of $13.5bn in assets, has benefitted from a strategy betting that short-dated US Treasuries would outperform longer maturities. These “steepener” trades have proven lucrative as investors anticipate swift rate cuts by the Fed. Additionally, Caxton capitalised on the yen’s strong rally against the dollar, driven by the unwinding of positions by investors who had borrowed yen to invest in higher-yielding assets.
The Macro fund is now up 9.9% for the year, following July’s gains, while the Global fund has risen 5.2%.
On average, macro funds — focused on global bonds, currencies, and other assets — have gained just 0.2% year-to-date as of Monday, according to an index from data group HFR.
