Hedge Fund That Rarely Loses Has Its Worst Start to Year Ever

(Bloomberg) -- Even one of the world’s steadiest hedge funds can’t escape the coronavirus-fueled market carnage.

The worldwide sell-off since last month has left London-based hedge fund LMR Partners down about 3% for 2020 through last week, according to people with knowledge of the matter, who asked not to be named because the details are private. It’s the worst start to a year in about a decade of trading for the $4.6 billion fund, which has never lost money over a 12-month period.

The LMR Fund lost 1.8% in February and was down about 2% last week, the people said. A spokesman for the firm didn’t respond to an email and call seeking comment.

The fund mainly uses a relative value strategy, which involves trying to spot situations in which securities trade outside their normal range, and wagering that the discrepancy will fade over time. However, these strategies tend to thrive in a low volatility environment -- the inverse of recent weeks -- as they rely on stable relationships between securities.

Hedge funds overall lost 1.7% on average last month, according to data compiled by Hedge Fund Research Inc.

LMR’s hedge fund has gained about 250% since its inception. In 119 months of existence through December last year, it posted losses in just 19 of them, according to a letter to investors seen by Bloomberg.

The firm manages more than $8 billion of assets and employs about 100 people in its London, Hong Kong and New York offices, according to its website. Its founders include former UBS Group AG traders Ben Levine and Stefan Renold.

--With assistance from Cameron Crise.

To contact the reporters on this story: Nishant Kumar in London at nkumar173@bloomberg.net;Katia Porzecanski in New York at kporzecansk1@bloomberg.net

To contact the editors responsible for this story: Shelley Robinson at ssmith118@bloomberg.net, Chris Bourke

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