Louis Bacon’s decision to return $2 billion to investors highlights the difficulties the biggest macro hedge funds are having this year as government intervention and declining trading volumes limit managers’ ability to make large bets.
U.S. stocks fell for a fourth day and Spanish bonds tumbled after European Central Bank President Mario Draghi failed to reassure investors he was ready to take immediate steps to support the economy. Treasuries gained, while the euro and commodities declined.
Hedge funds gained 0.2 percent in January as equities around the world had the best start in 18 years after U.S. economic growth showed signs of accelerating and European leaders moved closer to a solution for the region’s debt crisis.
Hedge funds raised their bullish commodity bets as mounting speculation that central banks will announce more economic stimulus halted a slide in prices and drove gold to its longest rally since August.