A $3.2bn Goldman Sachs hedge fund that pools some of the firm’s best ideas declined 5.6% last month as a bet on the direction of U.S. interest rates went wrong, two people with knowledge of the matter said.
Bloomberg News reports that Goldman Sachs Global Opportunities Fund, which invests based on the trade ideas from the money-management unit’s fixed-income team, took a position that interest rates would rise, only to see them decline, said the people, who asked not to be identified because the information is private.
Some hedge fund managers were blindsided in the first two weeks of the month as stock and credit markets sold off and interest rates dropped because of concerns that global growth was slowing. Hedge funds declined by 0.3% during October, according to data compiled by Bloomberg, as markets rebounded and volatility waned in the second half of the month.
“We believe monetary policy needs to catch up with growth, and that interest rates in the US and UK are likely to rise by a significant amount in the next one to two years,” according to a March paper written by the asset management arm.
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