Winton Capital Management LLC, the hedge fund started by David Winton Harding, bumped Louis Moore Bacon’s Moore Capital Management LLC from the list of the top 20 hedge funds after assets surged by 34 percent.
The $20 billion Winton Capital, which is based in London, climbed to 15th place from 22nd, according to data compiled by Bloomberg as of April 7. Moore Capital in New York fell to 22nd from 20th six months ago, with assets unchanged at $15 billion. London’s Man Group Plc (EMG) became No. 1 at $69 billion with its Oct. 14 purchase of GLG Partners Inc.
Harding, 49, uses computer-driven trading models known as managed futures, which appeal to investors seeking access to their money and diversification from stocks, according to Daniel Celeghin, a partner at Casey, Quirk & Associates LLC, a consulting firm in Darien, Connecticut. The funds, also known as commodity-trading advisers, took in net deposits of $39.1 billion in the year through March, the most of any strategy, said TrimTabs Investment Research Inc. and BarclayHedge Ltd.
“What’s very attractive is they’re totally uncorrelated to equities and liquid,” Celeghin said. “In some cases, as little as 24 hours, at most a week, you can get your capital back. As for actual historic return, over time you get a pretty solid high single digit, low double digit.”
More than 18 percent of industry assets were subject to withdrawal restrictions after funds suffered record losses during the 2008 global financial crisis, according to Singapore- based consultant GFIA Pte.
Goldman Sachs Stake
Harding founded Winton Capital in 1997 and sold a 10 percent stake to Goldman Sachs Group Inc. (GS)’s Petershill Fund in 2007, when Winton had $10 billion. He co-founded the AHL Diversified Plc computerized-trading program in 1987. Man Group acquired a majority stake in AHL in 1989, and bought the rest in 1994.
Managed-futures funds aim to profit from pricing inefficiencies by investing in futures and option contracts for equity and fixed-income securities, currencies or commodities.
Futures and options are derivatives, contracts whose value is derived from underlying securities or linked to specific events such as changes in interest rates or the weather. Hedge funds are mostly private pools of capital whose managers participate substantially in the profits from their speculation on whether the price of assets will rise or fall.
The Winton Futures Fund, the firm’s largest at $7.3 billion, climbed 3.8 percent this year through April 22, according to a person briefed on the returns, who asked not to be named because the information isn’t public. The fund gained 15 percent in 2010.
Funds following the strategy fell an average of 0.5 percent in the first quarter and advanced 7.3 percent last year, according to data compiled by Bloomberg. Industrywide, funds returned 2.2 percent in the first quarter and 9.8 percent last year, based on the Bloomberg aggregate hedge-fund index.
Moore’s flagship, the $7.4 billion Moore Global Investment Fund, declined 0.6 percent this year through April 7, according to a person briefed on the returns, who asked not to be named because the information is private. The fund advanced 4.8 percent in 2010. The $4.6 billion Moore Macro Managers Fund rose 0.2 percent in the first quarter and 12 percent last year, the person said.
Moore Capital is a global macro fund, a strategy whose managers aim to profit from broad economic trends. Macro funds returned 0.4 percent in the first quarter and 3.6 percent in 2010, according to Bloomberg data. Bacon, 54, founded New York- based Moore Capital in 1989.
“They’re not trying to raise a ton of money,” said Emma Sugarman, head of the U.S. capital-introductions group at BNP Paribas SA in New York, which helps hedge funds find investors. Moore aims to raise capital primarily from institutional clients, she said.
Man Group’s assets surged to $69 billion from $39.5 billion after the firm acquired GLG Partners for $1.6 billion to try to reduce its dependence on Man AHL Diversified, which had accounted for more than a third of its assets under management. AHL declined 4.9 percent this year through April 20 after gaining 16 percent in 2010.
The largest 20 hedge funds’ assets increased 10 percent to $582.5 billion from $528.2 billion six months ago, Bloomberg data show.
Funds with $5 billion or more pulled in 51 percent of new investor money in the first quarter, according to Chicago-based Hedge Fund Research Inc.
“A lot of large institutions, they’re only comfortable with the really big hedge funds,” Celeghin said. The large funds have “all built up institutional fundraising and client service and infrastructure.”
Paulson Passes Brevan
BlackRock Advisors, a unit of New York-based Blackrock Inc. (BLK), the world’s largest money manager, leaped five positions to No. 8 as assets climbed 17 percent to $26.6 billion.
Paulson & Co., the New York firm that grew 13 percent to $36 billion, overtook Brevan Howard Asset Management LP for the fourth spot. London-based Brevan Howard is now fifth with $32.3 billion.
The hedge-fund industry exceeded $2 trillion for the first time at the end of the first quarter, marking a recovery from record investment losses and client withdrawals during the financial crisis.
“Hedge funds are an attractive investment in an uncertain market,” said David Shukis, director of hedge-fund research and consulting at Boston-based Cambridge Associates LLC, an adviser to institutional investors. Pension funds are contributing most to the growth of the industry, he said.
The number of public pension funds investing in hedge funds rose 50 percent in four years as investors sought to preserve capital and diversify portfolios, according to London-based Preqin Ltd.
Hedge funds added $102 billion of assets in the first three months, according to Hedge Fund Research. Investment performance accounted for $70 billion of the increase and deposits from investors contributed $32 billion, the firm said.
Man’s ascendancy knocked Bridgewater Associates LP to second place in the rankings, even as Westport, Connecticut- based Bridgewater grew 3.3 percent to $62 billion. JPMorgan Asset Management, a unit of New York’s JPMorgan Chase & Co. (JPM) with $45.5 billion, slipped to third from second.
Highbridge Capital Management LLC, the hedge fund that’s also owned by JPMorgan, dropped three positions to ninth place after assets decreased 7.4 percent to $25 billion. The New York- based firm named Chief Operating Officer Todd Builione to the newly created position of president this month as it aims to strengthen its institutional business.
Och-Ziff Capital Management Group LLC (OZM), the New York-based fund run by Daniel Och, climbed to sixth place from eighth by growing 9.1 percent to $28.7 billion.
Below is a ranking of the 20 largest hedge funds by assets under management (in billion $):
Rank FIRM/LOCATION AUM 1 Man Group / London 69.0 2 Bridgewater Associates / Westport, CT 62.0 3 JPMorgan Asset Management / New York 45.5 4 Paulson & Co. / New York 36.0 5 Brevan Howard Asset Management / London 32.3 6 Och-Ziff Capital Management / New York 28.7 7 Soros Fund Management / New York 27.0 8 BlackRock / New York 26.6 9 Highbridge Capital Management / New York 25.0 10 BlueCrest Capital Management / London 24.5 11 Baupost Group / Boston 24.0 11 Cerberus Capital Management / New York 24.0 13 Angelo Gordon & Co. / New York 23.5 14 Farallon Capital Management / San Francisco 21.5 15 Winton Capital Management / London 20.0 16 King Street Capital Management / New York 19.9 17 Goldman Sachs Asset Management / New York 19.8 18 Canyon Partners / Los Angeles 19.0 19 Renaissance Technologies / East Setauket, NY 17.1 19 Elliott Management / New York 17.1
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