Some of the giants of the hedge fund world have made billions betting against the yen in recent months, marking a return to form for some blue-blood investors that stumbled after the financial crisis.
So-called "global macro" managers, which speculate on economic shifts by trading currencies, bonds and derivatives, have reaped their biggest gains in years trading on the Japanese currency.
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Caxton Associates, the Anglo-US fund run by former Goldman Sachs partner Andrew Law, made nearly 10 percent for investors in the past three months while Paul Tudor Jones' Tudor Investment Corporation and Louis Bacon's Moore Capital have seen their flagships rise 9 percent. In comparison, global macro hedge funds on average made just 3.5 percent in the preceding three years, according to Hedge Fund Research.
The trio of managers are among the most feted in the industry, but have been wrongfooted on several occasions since 2009 by rangebound markets dominated by politically driven reversals in sentiment.
The three funds declined to comment. Investors in the funds who passed performance information to the Financial Times declined to be named.
Most of the big, bold directional trades that global macro funds favor, such as George Soros' 1992 bet against sterling, have floundered in recent years.
Since the beginning of November, the dollar has risen 17 percent against the yen. Managers hope Japan's situation foretells a return to the volatile markets in which they succeed.
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"I think it's the rebirth of global macro," said the head of one top-five macro hedge fund. "If you look at the levels of implied volatility [in markets around the world] they still look too low to me . . . there could be quite a dramatic rebalancing of that."