A rare mix of macro and relative-value analysis and trading led the firm to anticipate the crisis and trade successfully through it, at a time when many fixed-income funds faltered
From the moment they set up the London and US-based fixed income firm Prologue Capital in late 2005, co-founders David Lofthouse and Graham Walsh had a strong sense that the world would be dramatically different a couple of years down the road.
Although they could not have predicted exactly how right they would be, the firm's founders came to realise that trouble lay ahead thanks to their intense focus on proprietary macroeconomic research, risk management and liquidity. Because of this, they were able to position the fund - and the firm - accordingly.
That served the firm extraordinarily well during the wretched market conditions of last year, when its flagship Prologue Fund netted a gain of nearly 19% in 2008. It...