Former Tory donor makes $1bn profit after betting on US bonds
A HEDGE fund run by billionaire former Tory donor Chris Rokos made more than $1bn (£793m) of profits after a successful bet on US interest rates.
Rokos Capital Management, a macro trading firm which bets on economic trends, reaped the profit after a sell-off in US bonds.
Macro hedge funds generally seek to benefit from market moves in government and corporate bond prices, which are often linked to expectations around interest rates.
The Federal Reserve held interest rates at 5.25pc to 5.5pc last month and warned it was too early to be optimistic about rate cuts. Inflation also proved more stubborn than expected in January at 3.1pc, dampening market hopes of a slew of interest rate reductions.
The unexpected economic data, and scepticism over quicker and faster rate cuts, led to a big sell-off in US bonds. That has helped the $16bn fund gain 8.8pc year to date, according to performance figures reported by the Financial Times. A spokesman for Rokos Capital declined to comment.
Mr Rokos, who acts as chief investment officer at the fund, made his name as a star trader at Brevan Howard, the hedge fund founded by billionaire Alan
Howard. The 53-year-old was one the fund’s most successful traders, coining annual profits of over $1bn for the fund twice while employed there.
Since then he has built Rokos Capital into a major institutional outfit operating out of London’s Mayfair district. It employs more than 250 workers across four offices around the world. Mr Rokos was previously a major Tory donor, giving the party £2m between 2009 and 2015. His last donation was in 2018.
Rokos Capital’s flagship fund, the Rokos Fund, has previously suffered from turmoil in the bond market.
The fund managed to claw back a positive return last year after the collapse of Silicon Valley Bank roiled prices. Rokos Capital lost 15pc in March 2023 following the chaos, erasing gains of 5pc for the first two months of the year. After cutting its positions it managed to recoup its losses by July and delivered an 8.8pc return for investors for the year as a whole. The fund generated a 51pc return for investors in 2022.
According to its most recently filed set of accounts, Rokos Capital distributed £445m of profits to partners in the firm last year, including Mr Rokos.
Revenues surged to £643m for the year ending March 2023 from £120m in the previous year thanks to the strong performance in 2022.