Indiana Grain Company, LLC

Posted: 03/15/10

By: tomgrisafi

Hedge funds that trade currencies are taking hits from politicians casting them as speculators out to sink the euro and push Greece into insolvency.

They are also losing money.

Macro funds fell 1 percent in the first two months of the year, according to data compiled by Chicago-based Hedge Fund Research Inc.

Brevan Howard Asset Management LLC, Europe’s largest hedge-fund firm, Moore Capital Management LLC and Tudor Investment Corp. were among those reporting fund losses.

The euro dropped 4.8 percent against the dollar in January and February, while the British pound tumbled 5.8 percent and the cost to insure Greek government debt rose by a third through the beginning of February. Still, macro managers said the lack of sustained moves in markets they favor, such as developing- country stocks and commodities, made it difficult to profit.

“You can’t put on conviction trades in this environment,” said Philippe Bonnefoy, chairman of Cedar Partners Investment Management Ltd. “And if you can’t do that, and you are a long-term investor, you aren’t making money.”

The euro’s decline was sparked by concerns that Greece would default on its debt. The pound fell because Britain’s record budget deficit of more than 12 percent of gross domestic product is about the same as Greece’s. Britain also must hold an election by June that could result in the first minority government since 1974.

Source: CNBC, Business Week

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