Talpins's Element Capital Soared 10% in January on Stocks, Rates

(Bloomberg) -- Jeffrey Talpins’s hedge fund Element Capital Management jumped 10 percent in January, extending gains from 2017 on the back of investments in equity and interest rate markets, according to a person with knowledge of the matter.

The $12.5 billion macro hedge fund revamped its portfolio in late 2017 on a wager that an overhaul of U.S. tax laws would pass. That allowed it to take advantage of the surge in equity markets, which helped erase previous losses and led to a gain of 5.5 percent on the year, said the person, who asked not to be identified. Element, which focuses on macroeconomic trends in developed markets, has had annualized gains of 20 percent since it began trading in 2005.

A representative for the firm declined to comment on the fund’s performance, or how Element has fared this month as markets have been roiled by concerns that central banks will aggressively tighten monetary policy.

After being the worst-performing strategy in 2017, macro hedge funds have begun to stage a comeback this year. The strategy gained 2.7 percent on an asset-weighted basis in January -- its best monthly return since 2010 -- according to preliminary estimates from Eurekahedge. Swings in equity and foreign-exchange markets, as well as the prospect of further interest-rate increases, have created opportunities to make money this year.

Read more about the return of macro funds here.

Element, with fewer than 40 investors, has been among the more sought-after hedge funds by producing solid returns even as the broader strategy fell short. In 2016, when macro funds gained just 2.3 percent, Element rose 19 percent. The year prior, when the average macro manager lost 1.2 percent, Talpins’s fund surged 23 percent.

The firm pulled in $2 billion of fresh capital in the two weeks it opened to investors in March and isn’t planning on raising more at this point, according to the person.

To contact the reporter on this story: Katia Porzecanski in New York at kporzecansk1@bloomberg.net.

To contact the editors responsible for this story: Margaret Collins at mcollins45@bloomberg.net, Alan Mirabella, Josh Friedman

©2018 Bloomberg L.P.