Brevan Howard to Dump Commodity Hedge Fund

Brevan Howard Asset Management will shut its commodity hedge fund, the Wall Street Journal has reported.

Citing two people familiar with the matter, the paper said recent poor performance has led the firm to close its $630 million fund managed by UK Partner Stephane Nicolas.

It was also reported the fund has fallen nearly 4.3% through the end of October and 4.2% in 2013. It also plummeted 10.3% in September, according to sources.

The Saint Helier, Jersey-based firm did not respond to a request for confirmation.

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Data from eVestment revealed commodity strategies have been underperforming across the board. For the month of October, commodities posted losses of 1.33%. The strategies also fell 0.42% in average returns for the first 10 months of 2014 and 3.02% in 2013.

Numerous banks have also exited the commodities business citing low revenues in the sector.

In late June, JP Morgan sold its physical commodities arm for $3.5 billion to Swiss trading house Mercuria. Credit Suisse also announced in July it would shut its commodities trading business as a way to trim the “non-strategic” parts of its investment bank.

“The restructuring of our macro business, including the exit from commodities trading, is expected to drive further capital, leverage, and expense reductions,” Brady Dougan, Credit Suisse’s CEO, said. He also stated that resources previously used in commodities trading would be reallocated to “more profitable businesses.”

Brevan Howard also shut a $2.7 billion emerging market fund earlier this year following a 15% loss in 2013. Then-manager and leader Geraldine Sundstrom subsequently left to join PIMCO in June.

The firm is one of Europe’s largest hedge fund managers with $37 billion in total assets. Its Co-Founder Alan Howard manages the $26.5 billion flagship macro fund.

The UK’s investment management sector is “suffering from a severe lack of female representation”, despite several initiatives to improve diversity, according to KPMG.

A survey of annual reports issued by 16 financial services companies found that 15% of company board members were women, and only 4% of executive directors were women.

The low numbers come in spite of a number of initiatives aimed at improving the gender balance on company boards. The European Commission has set a target for female representation on boards of 40% by 2020, while the 30% Club—chaired by Newton Investment Management CEO Helena Morrissey—has been working since 2010 for a similar cause.

“We will only really take a quantum leap towards better gender balance when organisations treat this as a mainstream, not a ‘diversity’, issue.”—Melanie Richards, partner and vice chair, KPMG

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Specific to the UK, in 2011 Labour peer Evan Davies published a report into female representation on boards that claimed it would take 70 years to achieve gender balance at the top corporate level, given the current rate of change.

Lord Davies set a target of 25% by 2015, but KPMG said UK asset managers still had “some way to go to meet such aspirational targets”.

Aberdeen Asset Management led the way, according to the new report, with four female directors on its board, or 29% of board members. Of the 16 listed fund management houses analysed, only one—Impax Asset Management—had no women on its board.

However, at the executive director level, only three groups had any female representation: Aberdeen, retail investment broker Hargreaves Lansdown, and currency management specialist Record.

Melanie Richards, partner and vice chair at KPMG, said “considerable progress” had been made towards greater diversity: “There is not one member of the FTSE 100 without female representation in the boardroom, the proportion of companies edging closer to Lord Davies’ target is edging up, and changes are clear to see in many of the UK’s leading industries.”

Richards added that companies were beginning to realise that “greater inclusivity opens doors to a wider pool of talent”, which in turn could lead to improved performance as boards reflect the make-up of their target markets more accurately.

“Our report reveals that UK investment managers still have some way to go to match these levels, yet we will only really take a quantum leap towards better gender balance when organisations treat this as a mainstream, not a ‘diversity’, issue,” she said.

A separate survey, published in November by think tank New Financial, painted a more positive picture in the pensions sector. According to the firm’s data, four of the five largest European financial institutions with the best top-level female representation were pension funds.