A string of ill-timed bearish trades and client outflows have slashed in half the money managed by Crispin Odey, one of London’s best-known hedge fund figures.
The outspoken investor who was a prominent backer of Brexit has seen the assets in his flagship Odey European fund fall from €2.5bn at the start of 2015 to €184m, according to fund documents.
Total assets managed by Odey Asset Management, which include funds not run directly by Mr Odey, have fallen from $11.7bn at the start of 2015 to $6bn at the end of August.
Hedge funds typically charge management and performance fees on the assets they manage, meaning that their business profitability is impaired when these drop. Odey Asset Management declined to comment.
Mr Odey, whose short selling of banks made his clients 11 per cent in 2008 as markets crashed, has stood out as one of the few hedge fund managers in recent years to aggressively bet against highflying asset prices after a decade of ultra-loose monetary policy.
These bets have resulted in painful losses for his clients as equity and fixed income markets have continued to rise in value.
A disastrous 2016 resulted in the Odey European fund, which Mr Odey launched in 1992, losing just under 50 per cent after a series of leveraged currency trades went awry.
The European fund has lost a further 15 per cent this year up to the end of August, meaning that almost all of the profits it has made since 2007 have been erased.
Odey European has generated a compounded annual return of 8.2 per cent since launching, compared to 7.3 per cent for the MSCI Europe daily net total return index, which it uses as its benchmark.
Some of the Odey Asset Management clients have transferred money from the European funds to similar funds run by Mr Odey, such as the $173m Odey Mac fund, but this, too, has seen its total assets under management fall from $1.15bn at the start of 2015, according to fund documents.
The drop in assets in the Odey Swan fund, which Mr Odey also manages, have been less severe, falling from €477m over the same period to €259m as of the end of August and largely attributable to investment losses rather than redemptions.
In 2015, Mr Odey wrote to his clients predicting that “this painful chasing after income by institutions and savers destituted by low interest rates must certainly end in a crisis”, arguing that equity markets were being propelled higher by “refugees” from fixed income markets who were being starved of yield.
In spite of ongoing losses, Mr Odey has stuck by his prediction that central bank bond-buying programmes and a build-up of debt in China will ultimately result in catastrophic losses for financial markets.
“It is always dangerous to fight the Fed and that is what we have been doing this year,” he went on to write in August last year after suffering severe losses for his fund. “It would certainly be simpler to follow the market. But then we would be ignoring the fundamental data.”