BH Macro is an investment trust which invests all of its assets into the Brevan Howard Master hedge fund, one of the largest hedge funds globally. This hedge fund aims to generate long-term appreciation through active leveraged trading and its exposure is mainly to global fixed income and foreign exchange markets.
Between the hedge fund's launch in 2003 and the end of 2009, it made a compound return of around 15 per cent - well ahead of the MSCI World Index which made around 6 per cent during that period. It uses a combination of global macro and relative-value trading strategies.
Private investors cannot access the hedge fund directly, nor is it easy for them to replicate the complex trading strategies it employs, making the appeal of the investment trust obvious. Another attraction is BH Macro's lack of correlation to mainstream asset classes, especially equities, since its launch in 2007. For example, the fund's net asset value (NAV) in 2008 rose 23.2 per cent - the year the FTSE All-Share fell 33 per cent. The trust's share price also did better, falling only 11 per cent.
Conversely, in better times the fund lags markets with its NAV only rising 0.97 per cent in 2010. As it is a listed fund, its share price will reflect shareholder sentiment as well as NAV, so its share price fell 4.9 per cent in 2010 as investors flocked to better returns in equities markets.
It also a more expensive total expense ratio (TER) than many mainstream investment trusts, of 1.87 per cent, though this reflects the fact it is invested in a hedge fund. The investment trust also charges a performance fee equal to the aggregate of 20 per cent of the appreciation in the NAV per share above the base NAV per share.
The investment trust was tipped by Alan Brierley of brokers Collins Stewart, in Investors Chronicle in January 2010.
Full data for BH Macro is available here.
BH MACRO (BHMG)
|PRICE||1,690p||1-YEAR NAV PERFORMANCE||0.16%|
|MARKET CAP||£578.71m||6-MTH NAV PERFORMANCE||1.65%|
|SET UP DATE||14 March 2007||3-MTH NAV PERFORMANCE||-2.12%|
|NAV||1,795p||TOTAL EXPENSE RATIO||1.87%|
|PRICE DISCOUNT TO NAV||5.98%||YIELD||0%|
Source: Investors Chronicle, *Morningstar.
Performance data as at 17 January 2011.
Asset Allocation as at 30 September 2010.