Performance hasn't always been easy and the gyrations of financial markets, such as the Gulf dramas of the spring, have tested investors' mettle. The chairman of a listed feeder into a hedge fund strategy says the compounded gains in macro funds deserve attention.

When equity markets whipsawed in the spring against a background of geopolitical dramas, inflation worries and a focus on AI, it has not always been easy to find diversified sources of return, as recently described here.

Even gold is not a sure-fire haven asset and government bonds aren’t as reliable a way of reducing portfolio correlations as before. One option, therefore is hedge funds, so advocates of these structures say.

BH Macro, a UK-listed, closed-ended feeder fund in the main macro hedge fund – registered in the Cayman Islands – of Brevan Howard, delivered a net asset value (NAV) return of 4.67 per cent and share price return of 10.28 per cent between the start of this year and 15 May, it told this news service recently. According to Chicago-headquartered Hedge Fund Research, its HFRI Macro (Total) Index gained 1.8 per cent in April from March. Between the start of January and end-April, this index gained 6.69 per cent.

The BH Macro strategy covers areas such as interest rates, foreign exchange, commodities, equities (via derivatives, to trade volatility) and digital assets.

“The fund will take a position based on a particular view on foreign exchange or rates, for example, but will have a strong degree of risk control in structuring the position which means the downside risk is a fraction of the potential upside gain,” Richard Horlick, BH Macro’s chairman, told this publication in an interview. “This ‘convexity’ of trades is important, as it means when trades are ‘wrong’ the losses are limited, but when they are right there can be significant returns.” 

“That is what makes BH Macro so attractive,” he said. 

The search for more investors
There are challenges. Consolidation in wealth and asset management mergers and acquisitions, a shrinking the number of decision-makers on the “buy-side” in the UK, creates difficulties such as ensuring that the share price discount to NAV is managed effectively. Simply put, BH Macro needs a bigger potential audience.

With a contraction caused by all this consolidation, the usual way to narrow a share price discount to NAV, via the route of share buybacks, is not as easy as it was. BH Macro is seeking to tap into a wider, more international range of shareholders to increase the range and diversity of its shareholder base, Horlick said. 

Closed-ended funds typically trade at a share price discount to NAV, and trusts typically have policies in place, such as buying back stock if a discount is wider than a set amount for a period. 

Recent times have been a tough test. According to a Morningstar report of 31 March, the listed fund’s board agreed an increased buyback allowance with the fund’s manager. Up to 14.99 per cent of BH Macro's shares can be bought back this year without fees, up sharply from 5 per cent in 2025. The report said the company noted that its share price return in 2025 was negative 1.7 per cent for the sterling class, and positive 1.7 per cent for the dollar class.

Results so far in 2026 have been more promising. Investors must remember the age-old benefits of the value of compounding, Horlick said. 

A sense of perspective is important with a macro fund strategy. “Since 2007, there have been three years when NAV has gone down – and it went down very slightly – and many times it went up by double digits,” he said. 

Horlick says he eats his own cooking: “A big portion of my pension fund is in BH Macro.”

Inevitably, AI comes into the equation. 

Brevan Howard’s risk team keeps an oversight of overall risks in the portfolio to ensure that it keeps within agreed bounds, Horlick said. Technology is crucial in making this work. The manager Brevan Howard uses AI as an input into the investment process, he continued.

AI has the benefit, he said, of helping to process information efficiently without any emotional elements coming in. 

“What hedge funds should do is to take positions to make a gain and hedge out a degree of the risks so that this is not all a 50-50-coin toss,” Horlick said. 

“Time and again in markets you see severe setbacks, and while hedge funds returns might at times seem a bit pedestrian, when traditional assets like equities do badly and hedge funds offer protection, people will remember why hedge funds are in their portfolios. It all comes back to the effect of compounding returns. The easiest way to make money is not to lose it,” he added.

HFR data showed that the hedge fund industry, as measured by the HFRI Fund Weighted Composite Index ® (FWC), chalked up a strong performance in April, rising 4.8 per cent for the month, recovering from March losses. Equity hedge and emerging markets focused funds achieved the strongest strategy results.