Legendary trader Louis Bacon told his investors on Thursday that he would be closing his big multi-manager hedge funds, another signal of the increasing difficulty traders are having making hedge fund strategies work.
“Disappointing results of these funds of the last few years obviously inform this decision,” Bacon wrote to his investors in a letter. “Intense competition for trading talent coupled with client pressure on fees has led to a challenging business model for multi manager funds such as ours.” But macro traders have struggled amid an era of ultra-low interest rates and massive central bank intervention. In addition, computer-driven trend-following traders ate away returns from the momentum strategies that many of these macro traders essentially deployed.
Still, Bacon will go down as one of the pioneering hedge fund traders on Wall Street. His Remington fund posted an annualized net return of 17.6% since inception and Bacon’s multi-manager funds are set to return a total of $19 billion in profits to its investors.
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