Hedge funds, speculators face big losses on Swiss franc rally

Currency speculators and global macro hedge funds with large short positions in the Swiss franc are staring massive losses in the face after the Swiss National Bank shocked markets on Thursday by removing a three-year-old cap on the currency.

The move sent the safe-haven franc soaring against the euro and the U.S. dollar at a time when more than $3.5 billion was betting on more franc weakness, the largest such position in more than a year and a half.

The damage from the Swiss franc's sharp moves comes as a blow for macro hedge fund managers nursing wounds from nearly four years of mediocre performance. Only days ago, the SNB termed the 1.20 francs per euro cap the cornerstone of its monetary policy.

"You have these massive policies which forced all investors to invest with the policy and then they remove the policy and everyone is left high and dry," said Chris Morrison, strategist for the $550 million Omni Macro Fund.

Data from the Commodity Futures Trading Commission released Friday showed net short positions of 24,171 contracts on the Swiss franc, the largest since June 2013. Adding in 662 short option contracts gives a combined position of 24,833 contracts or $3.5 billion
at the current rate of around 0.87 franc to the dollar.

Global macro hedge funds that use fundamental analysis to bet on the financial markets and represent $288 billion in assets on the Lyxor platform had a net short position of 2.6 percent, indicating a loss given the currency move.

"Yesterday, we were doing fine. We were up 2 percent this month, but with the SNB move, our gains have been wiped out," said Axel Merk, president of Merk Investments in Palo Alto, California, which has mutual fund assets of about $300 million.

http://finance.yahoo.com/news/hedge-funds-speculators-face-big-171046985.html
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Hedge funds, speculators face big losses on Swiss franc rally PgkowJT

Hedge funds, speculators face big losses on Swiss franc rally PgkowJT

Hedge funds, speculators face big losses on Swiss franc rally

Hedge funds, speculators face big losses on Swiss franc rally

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