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Autonomy Capital offers investors chance to exit fund at May value

Autonomy Capital, the macro hedge fund hit by a sharp sell-off in emerging markets, has offered investors the opportunity to withdraw their money and be paid back some losses after falling nearly 30 per cent so far this year.

Founded in 2003 by former Lehman currency and interest rate trader Robert Gibbins, Autonomy is a prominent global macro hedge fund that bets on a wide range of developed and emerging markets. The company is known for its bets on Argentine government debt — which later soured — and long-term bullishness on the country’s prospects.

The fund has made large gains in previous years, but this year is down close to 30 per cent, according to people familiar with its performance, as emerging markets have sold off.

In a letter sent to investors in July, Gibbins said that after profiting for years from themes such as the convergence of global interest rates, the source of trading opportunities had changed. He said the firm would now focus on opportunities in changing energy and production systems, particularly in the areas of transport and molecular technology.

Autonomy held positions in US biotechs Ginkgo Bioworks and Moderna and clean energy company Nextera Energy, as well as a small position in electric vehicle firm Tesla, at the end of June, according to its latest regulatory filings. At the end of last year Gibbins tweeted that moves by US firms to “leverage disruption in energy technologies” would lead to “massively lower [carbon] emissions and massively lower price”.

As a result, Autonomy has given investors who do not want to stay in the fund the chance to withdraw their cash at a net asset value in line with the end of May — higher than it is currently, with the company making up the difference.

Offering to make investors good on some losses is a highly unusual move in the hedge fund industry, although some funds do occasionally return cash to investors if trading opportunities change.

The firm managed about $6bn a couple of years ago, but assets have fallen sharply more recently following performance losses.

Autonomy declined to comment.

While Autonomy’s performance has not been good, the company is “looking very much to new growth frameworks that investors should understand” and has no plans to shut down, said a person familiar with its thinking.

The move, which has not previously been reported, comes as many hedge funds struggle this year during sharp sell-offs in bond and equity markets, driven by rapid tightening of monetary policy by major central banks in response to soaring inflation.

However, some macro hedge funds have been able to profit from the turmoil, notably by betting on bond prices falling. Macro funds on average are up 9.3 per cent in the first eight months of the year, according to data group HFR, with Caxton Associates, Brevan Howard, Rokos Capital and Odey Asset Management among those to make big gains.

Autonomy has previously profited from moves in markets such as Brazil in 2018, according to investor documentation. Prior to recent losses, the fund had made an annualised return of 16 per cent from launch until 2018, said a person familiar with the performance.

But the fund was wrongfooted the following year by the surprise ousting of Argentina’s market-friendly former president Mauricio Macri.

It also suffered big losses last year, driven by bad bets on bond markets in the US, Brazil and China at a time when a number of other macro funds were struggling to grapple with sharp moves in bond markets.

laurence.fletcher@ft.com

SOURCE: https://www.ft.com/content/da17b725-07dd-4500-8aa7-5c744890d4f7

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