Hendry said his flagship Eclectica fund had slipped 9.4% in the year to August, due mainly to strong correlations in the short-term between its substantial risk book and “the maelstrom of President Trump and the daily news bombs emanating from the Korean Peninsula.”
The “increasing regulatory burden” was another nail in the coffin for Hendry’s vehicle, which the manager said makes it “almost impossible to manage small pools of hedge fund capital today.”
By the end of August the fund’s assets stood at $30.6m, down from its peak in 2013, when it boasted over $1.3bn (£970m) worth of funds under management .
In a painfully raw message to shareholders, the hedge fund manager, a household name in the financial services industry, lamented: “It wasn’t supposed to be like this”. He noted that the decision to dissolve the fund was “especially frustrating as nothing much has gone wrong with the economy over the summer.”
But while the “sustained bout of economic growth” is good news for global equities generally, it was bad news for vehicles like Hendry’s, which are required to demonstrate a negative correlation with risk assets, avoid large drawdowns and post consistently high risk adjusted returns.
Hendry founded the company in 2002, shortly after abandoning his post at Odey Asset Management, but several years of flat performance impacted by the QE monetary policy regime, led to significant outflows.
“Sadly I will be unable to participate with such trades during the next upheaval in global markets with The Eclectica Fund but I hope that this commentary has at least roused you into contemplating scenarios that are presently deemed less plausible,” Hendry told investors.
“It remains only that I thank you for the great honour of having been responsible for managing your capital and to wish you all great financial fortune.”
