FX Concepts, once the world’s largest currency hedge fund, closing funds, firing employees as losses mount; AUM shrunk from $12bn in 2009 to $661m

October 8, 2013 Leave a comment

FX Concepts Closing Funds, Firing Employees as Losses Mount

FX Concepts LLC, the currency hedge fund founded by John Taylor that was once the world’s largest, is closing funds and shedding employees as losses for the company’s main trading program approach 15 percent this year. The hedge fund’s assets under management shrunk to $661 million as of Sept. 26, from about $12 billion in 2009, according to data from the New York-based company’s investor website. The San Francisco Employees’ Retirement System voted on Sept. 11 to pull the more than $450 million it had invested with FX Concepts, according to CNBC. Alison Johnson, a spokeswoman for the San Francisco pension fund, didn’t immediately return a call seeking comment.“We are in the process of restructuring — we are closing some funds and we are laying off some people,” Robert Savage, the chief strategist at FX Concepts, wrote today in a e-mailed response. “We have lost some big accounts this year. FX as an asset-class business has been difficult this year.”

Hedge funds that seek to profit on macro-economic events trading anything from currencies to commodities have had negative returns of 10 percent this year, according to data compiled by Bloomberg. Volatility in the $5.3 trillion-a-day foreign-exchange market rose in the first half of the year at the fastest pace since Lehman Brothers Holdings Inc. collapsed, catching traders off guard and wiping out gains from strategies such as the carry trade.

Fund Losses

FX Concepts’ flagship fund, the $619 million Global Currency Program, had lost 13.9 percent in 2013 as of August, according to a company report. The $16 million FX Concepts Multi-Strategy Program declined 10.96 percent year-to-date through August, company data show.

FX Concepts, which was founded in 1981 by Taylor and calls itself one of the oldest currency-only hedge funds, saw its Global Currency Program lose 3.11 percent in 2012 and 14.47 percent in 2011.

Savage didn’t comment on the number of employees that have left the company.

Taylor, 70, is attempting to sell a co-op he bought on New York City’s Upper East Side in 2010 for $25 million, according to a Sept. 13 report from The Real Deal. The purchase, which was for $4.5 million more than the asking price, was funded with a $20 million loan that was taken out from FX Concepts in June 2010, according to the report.

FX Concepts agreed to buy subscription-based financial research provider Track.com for an undisclosed amount in September 2012. Taylor maintained an active role in the firm’s research operation following the deal, with the idea that Savage, 50, would eventually take over full control.

“The trouble at FX Concepts aren’t unique, but more a symptom of the entire business,” Savage wrote in his e-mailed message. “Clearly we are rethinking our core business strategy.”

To contact the reporter on this story: Joseph Ciolli in New York at jciolli@bloomberg.net

Filed under Investing Process, Macro Trends

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