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Subpar Year for Soros' Quantum

The management firm does OK, but trails the S&P 500 and its hedge fund benchmark.
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Quantum Fund

, the flagship of George Soros' hedge fund operations, closed out 2003 up 15%, a rate of return that falls short of both the

S&P 500

and the average return of his global macro fund competitors.

According to data on


, November and December were particularly good to the $8.3 billion fund, accounting for almost half its annual gain.

During that time, Soros made negative comments on the dollar, which dropped from $1.158 against the euro on Nov. 1 to $1.257 on Jan. 1. The Quantum Fund's most famous -- and among its largest -- gains came from its bet against the British pound in 1992. After shorting it, Soros made about $1 billion on the bet, in the process nearly breaking the Bank of England.

"I'm sure macro traders made money in currency markets," said Randy Durie, a partner at Plimsoll Capital, a Summit, N.J., currency fund. "Volatility has picked up and there has been a renewed presence of all different kinds of hedge funds in the currency markets, and I'm sure they're generating some of their profits from there."

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Soros Fund Management did not return a call seeking comment on the fund's results.


CSFB/Tremont Index

, which tracks the performance of major hedge funds, showed the average global macro fund -- which makes big bets on currencies, equities, interest rates and other instruments across all markets -- was up 18% for 2003.

"In general, macro funds have done very well this year, and December was an exceptional month for macro funds," said Josh Rosenberg, president of

Hedge Fund Research

, a Chicago research and advisory firm.

According to Hedge Fund Research's database, the macro funds it tracks gained 23.1% for 2003, and 4.5% of that average gain was realized in December.

Soros Fund Management, which runs the Quantum Fund and several other hedge funds, got new leadership last year when Mark Schwartz took over as chief executive. Schwartz, the former head of Goldman Sachs Inc. Asia, brought on former Goldman partner Jacob Goldfield and Colm O'Shea, a Citigroup managing director for fixed income.

The Quantum Fund posted an average annual return of 7% between early 2000 and the end of 2002, following the resignations of chief strategist Stanley Druckenmiller and fund manager Nicholas Roditi. They left Soros in April 2002 after Quantum racked up a 22% loss for the first four months of the year.The fund has since adopted more conservative investing strategies.