BlackRock to close poor performing $1B macro hedge fund

Chris Newlands
Scott Mlyn | CNBC

BlackRock has become the latest investment house to close a macro hedge fund after its $1bn vehicle suffered its worst-ever performance and investor outflows.

The world's largest asset manager said it is returning money to investors within its Global Ascent fund, which makes bets on bond and currency markets.

The decision to wind down the fund, which trades instruments based on changes in economic policy, comes a month after Fortress Investment Group announced the closure of its $2bn flagship macro fund.

The Fortress fund, managed by Mike Novogratz, had been one of the worst performing large hedge funds in the world this year. Its assets under management had fallen from as much as $8bn at its peak to under $2bn as a wave of investors redeemed their money.

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BlackRock said in a statement: "We believe that redeeming the Global Ascent fund was the right thing to do for our clients, given the headwinds that macro funds have faced."

The Global Ascent fund is down about 9.4 per cent this year — its worst performance since it was launched in 2003. The fund lost 12.3 per cent in the first three month of 2015.

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Dirk Wiedmann, head of investment strategy at fund house Aalto Invest, said: "These funds thrive on the predictability of central banks but the opposite has been true since the financial crisis. This has made life very hard for fund managers and investors are pulling money as a result."

BlackRock's global macro fund is part of its direct hedge fund business, which ran $31bn of assets as of June. BlackRock has total assets of $4.5tn.

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BlackRock said: "We are committed to our macro investment capabilities. We regularly review our product set to ensure alignment with client interests. Over the past several years we have closed, on average, over 200 funds a year."

Preqin, the fund data provider, said 2015 would be the worst year for performance across the hedge fund industry since 2011 as managers struggle to respond to uncertainty over Chinese monetary policy and US interest rate rises.

According to data from Hedge Fund Research, there were 200 hedge fund closures during the first half of this year, up from 189 during the same period in 2014.

The Global Ascent fund was run by Paul Harrison who became its lead manager in 2010.