February 9, 2018 / 11:28 AM / a year ago

Market turmoil too late to save computer driven hedge fund Harmonic

LONDON, Feb 9 (Reuters) - Computer-driven hedge fund Harmonic Capital Partners, which bets on macroeconomic trends, said it is to close because of falling fees and low market volatility before recent turbulence.

The $1.6 billion London-based manager’s closure, which was first reported by trade magazine HFMWeek, comes as hedge funds that bet on macroeconomic trends have struggled to perform.

Harmonic decided to shut before nerves about rising borrowing costs sent volatility soaring and put global stock markets on course for their worst week since the height of euro zone crisis in September 2011.

“Sadly after 15 years we’re closing and we have returned capital to investors,” Alastair Smith, sales and investor relations partner at Harmonic, told Reuters.

“It’s always a sad moment and a disappointment but in talking to investors, it was the right thing to do,” he said.

“It’s difficult to build a brand and provide an institutional service with a backdrop of low volatility market conditions and falling fees,” he said.

A composite of Harmonic’s macroeconomic strategy run for individual clients lost 7 percent in the 12 months to the end of January, while a similar composite of its currency strategy lost 16 percent over the same period, according to an index compiled by BarclayHedge.

Harmonic shut its Alpha Plus Macro fund last fall after it lost 27 percent in the 12 months to the end of September, showed the data.

So-called macro funds made gains of 2.24 percent in 2017 compared to the average hedge fund gain of 8.64 percent, according to data from industry tracker Hedge Fund Research.

Harmonic was founded in 2002 by David Pendlebury and Richard Conyers, who both left the firm in the summer of 2016. Pendlebury and Conyers retained a share in Harmonic’s revenue, according to Smith.

The firm has been searching for a strategic partner for the past two years but the weakening performance and falling revenue from investor redemptions and low-fee products offered made it harder for a partner to come on board, said Smith. (Reporting by Maiya Keidan; Editing by Jon Boyle)

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