Taula Capital’s $1.5bn TSO fund plunges after bond sell-off

Taula Capital’s TSO fund lost 12.2% in September and stood 12.8% below its March launch value at the end of the month, according to people familiar with the fund’s performance. Taula raised about $1.5 billion for the strategy in March.

The fund is a concentrated interest-rate strategy that had positioned for European borrowing costs to decline. Instead, yields rose after inflation proved persistent and investors revised expectations for central bank policy, which pushed prices lower across fixed-income markets.

Most of the fund’s losses since launch occurred in September. Investors in the vehicle are subject to a lock-up that prevents redemptions until next spring.

The bond sell-off was amplified by supply and geopolitical factors. Ongoing conflict involving Iran increased risk premiums, and heavy issuance from technology firms, including companies linked to artificial intelligence, added corporate debt to the market.

Global government bonds fell more than 2% over the quarter, the worst quarterly showing since 2024. French government debt recorded its weakest quarterly performance in decades as investors weighed the country’s fiscal position and political uncertainty.

Because the TSO strategy is concentrated, its losses exceeded those of more diversified bond funds during the same period. The timing of the fund’s March launch left it exposed to a rapid shift in interest-rate expectations in late summer and September.

People familiar with the fund provided the performance figures and declined to be named. Taula Capital did not comment when contacted about the fund’s results.