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By Beverly Chandler, Opalesque London:
The significant volatility experienced by the leading equity markets over August this year were meat and drink to the macro sector that thrives on dramatic price adjustments. A leading exponent, the $24 bn Brevan Howard Master Fund, has enjoyed great success this year, with returns that have been passed on to its listed feeder fund, the BH Macro fund. Ian Plenderleith, chairman of BH Macro reports that in early October the sterling NAV of the fund is up 11.7% while the share price is up 20.6% net so far this year.
The share price in a listed fund is determined by supply and demand in the market and demand has outstripped supply, bringing shares in the BH Macro fund to par.
"The share price holds up because the NAV rose up 6.2% in August" explains Plenderleith. "The purpose of the fund is to provide a steady positive return, uncorrelated with movements in any particular market sector and this year it has been good."
If more evidence were needed of the non-correlation of a macro fund with equity drama, the years 2007 and 2008 show what the BH Macro fund can achieve with returns of 20.67% and 23.25% respectively, and 2007, the first year of the fund was a short year with figures reflecting just 10 months of trading.
Plenderleith explains: "The BH Master Fund is a macro fund, trading in interest rates, bond yield curves and exchange rates all based on a macro economic view of the prospects of a range of economies."
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