Investors Redeem Half Of Paul Tudor Jones' Main Fund In Past Year

Tyler Durden's picture

The woes for hedge funds continued in the second quarter, and nowhere more so than among the macro fund community, which posted its worst first half since 2013, losing 0.7% , and according to Hedge Fund Research have returned just 1% annually in the past five years, in an investing world which no longer makes much sense courtesy of central bank intervention. Most impacted by this revulsion against the active investing community has been none other than Paul Tudor Jones, whose investors are increasingly deserting him according to Bloomberg, which reports today that clients yanked 15% of their assets from his main BVI fund in the second quarter, leaving AUM at just $3.6 billion, roughly half from a year ago.

Jones, whose BVI Global Fund is down 1.9% through July 21, has been taking aggressive steps to revive his firm, including reducing fees and headcount. As revenue at Tudor declined, Jones last month sold the firm’s 43-acre Greenwich, Connecticut, headquarters’ property. Tudor then said it plans to move to a location in lower Fairfield County that’s more convenient to New York City, where the firm has offices. It is probably also cheaper. One year ago, Jones also dismissed 15% of his employees. He has told clients he will manage a larger chunk of their money and has encouraged his portfolio managers to take more risk. Jones has also leaned on quantitative tools to help with trading, including introducing technology that replicates the bets of his best managers.

Finally, Tudor has this year reduced its management fee to between 1.75% and 2.25% while taking a 20% cut in profits, after decades of being one of the most expensive hedge funds. The firm had once charged management fees as high as 4% for some clients, and a performance fee of as much as 27% for others, Bloomberg reports.

Alas, so far these "aggressive steps" have failed to yield results. Jones, 62, and his peers including Brevan Howard's Alan Howard and, of course, John Paulson, are experiencing a "punishing shift":

The old guard who shot to fame in the 1980s and 1990s are foundering, while a younger set of managers are making money, hiring and attracting new investments. The veterans are finding it’s no easy feat to replicate stand-out profits of yesteryear, when markets were more opaque and less efficient.

One can debate whether markets were less efficient then compared to now, but one thing is certain: icons such as PTJ have failed to find their groove in a world where central banks have injected $15 trillion in liquidity. Aside from BVI Global, Tudor also manages a fund tied to the performance of multiple teams of managers, an event-driven portfolio, and individual accounts. In total, the firm now has just under $8 billion in assets, compared with $14 billion in June 2015 according to Bloomberg.

Meanwhile, Tudor employees have also defected along with clients.

Global rates money manager Adam Grunfeld quit in May after nine years and is set to join Element Capital, the macro fund run by 42-year-old Jeff Talpins. Zorin Finkelsen and Dudley Hoskin left to join Balyasny Asset Management. Other departures have included risk-management chief Joanna Welsh, who departed for Ken Griffin’s hedge fund Citadel last year. Separately, money manager Dan Pelletier took a sabbatical to design quantitative tools for trading, people with knowledge of the firm said. Pelletier, who had worked at Tudor for nine years, couldn’t be reached for comment.

Jones' recent troubles are a humiliating fall from grace for the once-storied investor, whose main BVI Global Fund produced average annual gains of about 26% from 1987 through 2007. However, since 2008 his annual average return has slid to about 4.7% with results turning increasingly more negative in recent years.

In his biggest losing bet - so far - Jones banked on macro making a comeback. Last year he said central bank policies, which have suppressed volatility and encouraged more government debt, will backfire and macro strategies will profit when the debt bubble bursts. So far that hasn’t materialized.

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BullyBearish's picture

so...tell me again who's buying all those shares the "smart money" is selling?

Soul Glow's picture

If you're watching the market what you are seeing is the algobots masterbate with each other in the world's greatest stock swap circle jerk known to man.

Soul Glow's picture

People don't need money managers anymore.  They just need to blindly trust the market which is run by algobots created by JPM to pump the market higher.  Hey and with this ugly, fat bubble, who needs anything else?

hola dos cola's picture

That Pelletier could be of help. Team him up with an old-fashioned trapper. Develop criteria for the baiting. #TIDT

BandGap's picture

Isn't Paul Tudor Jones the bassist for Led Zepplin?

WTF.

Pull.The.Fucking.Pin.

PTFP

Hongcha's picture

I am making % wise more $$ than Jones' firm this year?  Amazing.  I consider him a very astute trader.

hola dos cola's picture

Wonder what profile would fit those clients leaving. And whether that profile fits those leaving the other funds too.

Catahoula's picture

Paul fall down. Absurd management fees, ridiculous strategy, pitiful performance in rising markets year over year, and extravagance at investor cost. What's in a name? 

Chippewa Partners's picture

What profile fits those clients?   It sure isn't Mom n Pop who might own a cap weighted S & P 500 index fund and beats the pants off those HF'ers...........or even an equal weighted S & P Fund.........

Chris88's picture

Lol,beats the pants off them.  Until the market doesn't go straight up for 9 years in a row.  Oh how I can't wait until massive volatility returns to see all the people beating the "active management is dead" drum to get very, very quiet.

ludwigvmises's picture

Losers average losers.

youngman's picture

He relied on old school Econ 101..its a new Central bank world out there now....there is not downside..its all printibale