Gaiacorp, 1987 -1991
Gaiacorp, founded in 1988 by Dr Ross Jackson, a visionary operations researcher and financial analyst, launched the first of a new generation of currency hedge funds, extending the portfolio concept of risk reduction through diversification to the currency market and effectively establishing a new asset class, independent of equity, bonds, property and commodities. The Gaia hedge funds utilised leveraged long and short positions in over 300 cross combinations in 22 currencies, managed through extremely powerful optimisation techniques, enabling the funds to achieve exceptional returns at relatively low risk.
Gaiacorp achieved spectacular performance over the three years from 1988, making front page news in the Wall Street Journal and International Herald Tribune with Gaia Hedge II becoming the world’s top performing fund for all investment sectors over this period, gaining 86% in one month alone. Funds under management grew quickly from zero to over $100m, and at one point, Gaia Corp was rumoured to be the largest purchaser of currency options in the world, buying about $2m a day in premium outlay. In 1989, its trader, Bernard Lietaer, was voted ‘Currency Trader of the Year'.
Whilst the EMS devaluation crisis in 1992, interest rate convergence, increased spreads. and option pricing charges reduced subsequent performance of the funds, Gaiacorp’s currency exposure active- management services remained the best in the world through the 1990’s, beating neutral ‘no cover’ and alternative ‘always cover’ strategies by about 2% per annum.
Equally innovative was the organisation’s early commitment to Corporate Responsibility – the group was, from the outset, 80% owned by a Danish charitable trust dedicated to sustainability: Gaia Trust.
Nigel Tuersley, a co-founder, was Managing Director and Head of International Market Development over this three year period, during which time he was registered as a member of IMRO (Investment Management Regulatory Organisation).
GaiaTrust, funded by $20m from the currency operations, later supported over 300 sustainability projects in 40 countries, focussing in particular on the ecovillages movement for which the trust is credited with much of its early international momentum