April 12, 2018 / 1:33 PM / 7 months ago

Brevan Howard shuts Israel's office in cost-cutting drive-sources

LONDON, April 12 (Reuters) - British hedge fund firm Brevan Howard Investment Management has shut its office in Israel, according to a U.S. filing, in a move which two sources close to the company said was aimed at cutting costs following poor performance across its funds last year.

A March 28 filing to the U.S. Securities and Exchange Commission said London and Jersey-based Brevan Howard, one of the biggest hedge funds in Europe, had recently "ceased operation" in Israel, without giving more details.

Two sources close to the fund, including a former employee at the Tel Aviv-based office, said the closure was due to asset losses incurred by the company last year.

A third source with knowledge of the matter said the office had around 25 employees last year, or about 10 percent of its global staff as of November, with a couple of traders at its peak a few years ago. That source said the closure was part of a strategic review of Brevan Howard's global platform, declining to give further details.

The source added Brevan Howard had 230 staff globally today across offices in Geneva, Hong Kong, Jersey, Washington, London, New York and Singapore. The firm's website says it employs over 200, down from 250 in November.

Co-founded by Alan Howard, one of Britain's best known investors, Brevan Howard is a so-called "macro fund" that typically trades securities related to interest rates, currencies and stocks based on broad predictions about the global economy. It built its reputation on its strong profits during the financial crisis of 2008.

In three of the last four years, however, Brevan Howard's flagship Master fund has produced losses, according to a report distributed to clients and seen by Reuters, prompting some clients to withdraw their money, according to data on the hedge funds industry compiled by investment bank HSBC.

The company managed around $8.5 billion in assets at the end of February, the third source with knowledge of the matter said. It managed $40 billion at its peak in 2013.

The $4.7 billion Master fund lost 5.4 percent last year compared with average gains of 2.2 percent recorded by the wider industry over the same period, according to the HSBC data.

The fund recouped some of those losses since the start of the year, making gains of 1.9 percent in the two months to end-February, according to the third source.

Another fund managed by the firm, the $485 million listed Macro Limited, has chalked up gains of 2.2 percent to end-February after losing 0.3 percent in 2017. Unlike the Master fund, the listed vehicle has to publish a report of its performance monthly.

Macro hedge funds lost 3.78 percent on average in February after delivering performance of 2.8 percent in January, showed data from industry tracker Hedge Fund Research. (Additional reporting by Lawrence Delevingne in New York and Steven Scheer in Jerusalem, editing by Silvia Aloisi and Alexandra Hudson)

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