SkyBridge has worst year since 2008 after structured credit hit

SkyBridge Capital, the fund of hedge funds led by Anthony Scaramucci, has recorded its worst annual performance since 2008, losing about 7.5 per cent of its value while its peers posted positive returns in a strong year for bonds and equities alike.

Describing 2020 as a “rough year” for SkyBridge, Mr Scaramucci said the final outcome represented a rebound, since it lost about 24 per cent in March alone.

The fund’s worst year was 2008, when it fell 19 per cent. Its 2020 performance compares with a 6.7 per cent increase for the first 11 months of the year in the fund-of-funds composite index compiled by HFR.

SkyBridge’s holdings in certain hedge funds were tilted towards structured credit. This area of the market was hit hard during the turmoil last March and the sharp decline in valuations across the sector triggered a wave of redemption requests from investors. 

SkyBridge experienced a net outflow of $1.4bn during the year, said a spokesperson for the investment manager. That and the performance decline had shrunk overall assets under management to approximately $7bn at year end.

The firm is hoping to collect new assets with the launch this week of a bitcoin fund, capitalising on surging investor interest in the digital currency. Bitcoin was one bright spot in SkyBridge’s investment performance in 2020.

It began buying bitcoin in November and is sitting on a $100m profit from its $175m investment. The price of the digital currency has risen more than 300 per cent over the past year, even accounting for a sell-off on Monday.

The new SkyBridge Bitcoin Fund is aimed at “democratising bitcoin for mass affluent and accredited investors”, said Mr Scaramucci, who was briefly the Trump administration’s White House communications director in 2017.

“Bitcoin started out in the Wild West and is now an asset being institutionalised,” he said. “A lot more institutional order flow is coming in 2021. We are telling people who are affluent or qualified investors that they can get in ahead of institutions.”

A number of institutional investors have been amassing stakes in recent months, including Mass Mutual, the insurer, and Ruffer Investment Management. Meanwhile, payments group PayPal has begun dealing with the currency.

The demand for bitcoin reflects its status as a scarce asset and growing acceptance from financial institutions who are worried by central banks expanding their balance sheets, Mr Scaramucci argued, saying it could nearly quadruple in value again to $100,000.

“Bitcoin has trumped rivals in the last 11 years and it’s the digital leader,” said Mr Scaramucci, who said it now represented a “digital monetary network”.

“I started out as a sceptic, but now that bitcoin has a market value of $500bn it is being recognised as a leader in the digital space,” said Mr Scaramucci. “It is Google, not Yahoo. A Facebook, not MySpace.”

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