Former Argentina economic chief Nicolás Dujovne, who resigned in 2019, is now experiencing significant gains through his hedge fund, Tenac Global Fund, which reported a 22% increase in 2024. The fund’s success is driven by investments in high-risk Argentine bonds amid a favorable market environment created by President Javier Milei’s policies. Investors await further developments regarding Argentina’s negotiations with the IMF and potential economic reforms.
Nicolás Dujovne, Argentina’s former economic chief, resigned in 2019 amidst a chaotic post-election selloff that raised concerns regarding the future of pro-business policies under President Mauricio Macri. Now, five years later, a bond rally driven by President Javier Milei’s market-friendly initiatives is generating significant gains for Dujovne from his new role in finance.
Tenac Global Fund, a hedge fund that Dujovne co-founded in 2020, achieved a net gain of 22% last year, as indicated in an investor note reviewed by Bloomberg. The fund’s profits were largely attributed to high-risk investments, particularly in Argentine bonds, which significantly boosted its 2024 performance. Tenac currently manages about $144 million in assets.
The hedge fund’s performance outstrips that of a developing-world index for 2024, with industry research firm BarclayHedge reporting Tenac’s return at 21.7%, placing it as the second-best performer among similar hedge funds. Tenac noted, “Among the 10 sovereigns that generated the highest returns in 2024, Tenac was involved with nine of them throughout the year. We only missed out Bolivia.”
High-yield bonds have shown impressive returns due to emerging economies securing funding agreements with institutions like the IMF and implementing pro-market reforms. A Bloomberg indicator of EM high-yield dollar bonds registered a remarkable 15% rise last year, its best performance since 2016, while countries including Argentina saw triple-digit returns in 2024, vastly exceeding EM investment-grade debt.
Dujovne’s tenure as economic chief saw Argentina’s bonds surge, aided by Milei’s comprehensive plans for the economy, pushing some sovereign bond prices to levels not seen since Dujovne’s time in office. Although Argentina’s bonds maturing in 2029 have seen a 2.3% decline this year, they remain considerably higher than their pre-election values.
Investors are closely monitoring negotiations between Argentina and the IMF, expected to culminate in April. Dujovne was instrumental in securing a historic $57 billion IMF bailout in 2018, although post-election volatility prevented the complete release of funds. Market specialists, including Bank of America, anticipate that Argentina will agree to a $20 billion program, which may involve currency control adjustments.
BofA strategists believe investors are undervaluing the potential for Argentina to adopt stricter economic measures under the new agreements. Thus, the evolving economic landscape reflects a critical juncture for both Dujovne’s fund and Argentina’s future fiscal strategies.
Dujovne’s hedge fund, Tenac Global Fund, has successfully capitalized on favorable market conditions for Argentine bonds, leading to significant gains. The outlook for Argentina’s economy hinges on negotiations with the IMF, potentially resulting in new austerity measures and adjustments to currency controls. As the nation’s fiscal policies evolve, so too may the investment strategies and performance outcomes for funds like Tenac.
Original Source: www.batimes.com.ar
