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Market Extra: Hedge fund Alphadyne Asset Management loses $1.5 billion as yields tumbled in July, says report

Hedge fund Alphadyne Asset Management is reportedly one of the big losers of a rally in global bonds, as bets that rates would rise have left the $12 billion macro strategy ensnared in money-losing wagers, according to a report from Bloomberg News on Tuesday.

The hedge fund is looking at losses estimated to be around $1.5 billion after its funds plunged through July, Bloomberg reported, citing unnamed sources familiar with the matter. Its flagship fund Alphadyne International Fund is said to have lost about 10%.

Many investors, in general, have been caught offside by the recent sharp rally in government debt, with market-based rates falling amid high inflation readings in the U.S. The 10-year Treasury yield
TMUBMUSD10Y,
1.175%
,
currently near the lowest levels in almost six months, has been on a downward trend along with its counterparts in Australia, Germany, and the U.K.

Alphadyne’s losses would be especially surprising because the fund hasn’t had a losing year since it started in 2006, Bloomberg said.

Alphadyne Asset Management is an alternative investment management firm led by Chief Investment Officer Philippe Khuong-Huu. Its investors include pension funds, insurance companies, asset managers, consultants and sovereign-wealth funds.

A call seeking comment from Alphadyne’s New York office wasn’t immediately returned.

Khuong-Huu is a founder of Alphadyne and a former Goldman Sachs executive, where he served as head of the global interest rate products group at one point, according to the firm’s website.

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