Business

Rokos hedge fund company loses money after bond market crisis


Billionaire trader Chris Rokos’ hedge fund manager posted a loss in its most recent financial results after its fund was hit by a sharp sell-off in government bonds, even though its traders they were able to make much profit from the increase in inflation.

Rokos Capital Management, one of the world’s largest macro hedge fund firms with around $15.5 billion in client assets, posted a loss on members’ remuneration of £3.6 million over 12 months. as of March 2022, according to a filing with Companies House. That compares with a profit of £914m for the previous year.

The latest results include a very difficult period for the media shy trader who has become one of hedge fund’s heaviest losses in short-term bond sell-off in the fall of 2021. His fund, which had been profitable in the early days of the coronavirus pandemic, ended calendar year 2021 with a decline of about 26%.

However, it has since rebounded strongly, profiting from bets on rate hikes last year, even during UK market turmoil in the fall. The fund ended last year up about 51%, with just one month of losses, its strongest calendar year since its launch in 2015.

Only a small fraction of the fund’s returns in 2022 are covered by the management company’s most recent financial results.

Rokos Capital did not immediately respond to a request for comment.

The company’s revenue, driven by management fees and performance, hit more than £1 billion in the year to March 2021, thanks to a roughly 44% increase in funds in the calendar year 2020. fell to just £119.7m in the five years to March 2022.

Rokos himself earned £509m in the year to March 2021. In the most recent results, however, the member with the greatest interest was paid just £4.2m.

While some macro funds were hit hard in the fall of 2021, when markets began to worry about the prospect of rapidly rising interest rates, the sector has benefited. 2022 looks to be the best year since the global financial crisis. Macro funds, which trade in global bonds, currencies and other markets, are up 8.8% through the end of November last year, according to data group HFR.

This year they have been able to profit from large and long-term moves in the bond market, triggered by a sharp rise in global inflation. For example, yields on 2-year US Treasuries have increased from 0.7% to 4.4%, while in the UK, 10-year Treasury yields have increased from less than 1% to around 3, 7%. Output increases when price falls.

Rokos is a star trader at the hedge fund company Brevan Howard, which he co-founded and where he makes billions of dollars in profits for investors who trade bonds and options, best known as one of the world’s most closely watched macro traders.

laurence.fletcher@ft.com

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