LONDON (Reuters) - The manager of Brevan Howard’s $570 million (364 million pound) currency fund is among a number of traders leaving the hedge fund firm because of underperformance, a source with knowledge of the matter said.
Luke Ding headed up the Brevan Howard Investment Fund II Macro FX Fund, which has struggled to consistently make money since its launch.
Brevan, one of the world’s top fund firms, is consulting investors before deciding whether or not to close the fund, the source said, speaking on the condition of anonymity. Two or three of the traders who are leaving work directly on the fund.
So far this year the fund has gained 1.58 percent to May 22, but last year it fell 2.32 percent and has an annual return of less than 1.5 percent since its launch, performance data shows.
Ding joined Brevan in 2007 from Merrill Lynch, according to the Financial Services Authority’s Register. He could not immediately be reached for comment.
In an industry which stakes its reputation on an ability to make money in all markets, Brevan is renowned for taking a particularly tough approach to underperforming traders and funds.
While those who make the firm money are rewarded with extra capital for trading, losing traders see their allocated capital shrink and - if losses are too steep - may face the exit.
The fund is also letting a “handful” of traders go as part of its biannual review, the source said. The traders were spread across asset classes and none were senior risk-takers, the source added.
Brevan, which manages more than $40 billion in assets, has added around 40 traders to its ranks in the past two years, many of them from banks cutting back on trading staff. The firm now employs 80 traders, mainly from its London and Geneva offices.
The Master fund, which has never had a down year, lost 2.6 percent last week, two investors said, one of a number of so-called global macro managers wrong footed by the recent round of volatility. The fund is still up 4.3 percent this year, however.
Reporting by Tommy Wilkes; Editing by Carmel Crimmins Louise Heavens