Dollar Bet Bolsters Hugh Hendry's Eclectica Fund

Jun 12 2015 | 2:08pm ET

Correct positioning on the U.S. dollar has paid off for Scottish hedge fund Eclectica Asset Management.

Run by Hugh Hendry, the company’s Eclectica Fund took positions last year that benefited from a rising U.S. dollar and pushed the fund to a 28% gain over the past 12 months, according to a Bloomberg report. The result puts the macro fund which is up 11.3% so far this year, ahead of 95% of its peers for the 12-month period. 

Hendry founded the business in 2005 and returned a whopping 32% in 2008, a year when the S&P 500 lost nearly 40%. He has had rough sailing lately, however, posting losses in 2012 and 2013, and has suffered significant withdrawals as a result. Assets under management, once more than $1 billion, dipped to less than $500 million in 2014.

Hendry credits the strong performance to dollar assets he bought following an August 2014 meeting of global central bank chiefs in Jackson Hole, Wyoming. At the meeting, ECB president Mario Draghi signaled that the European Central Bank would begin a broad quantitative easing program sooner rather than later. Hendry correctly assumed that the world’s central bankers had thus agreed to let the U.S. dollar rise.

At the moment, Hendry is betting on rising Chinese stocks, the article noted, and is exploring a relative value trade in Italy in which one is long equities and short 10-year government bonds. 

Hendry gained prominence among U.K. money managers during and after the financial crisis, during which he made several appearances on television. He was outspoken in his belief that economists, including Nobel prize winner Joseph Stiglitz, were out of touch with the real world.

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