Daniel Bystrom, former head of equity derivatives trading at MF Global Inc., and Neil Boyarsky plan to start Hawksfield Capital LLC, a New York-based equity volatility hedge fund, by the end of this month.
Hawksfield Capital will start with $10 million to $20 million of Bystrom and Boyarsky’s own money, as well as capital from friends and family, Bystrom said in a telephone interview.
“The fund will deliver returns that are uncorrelated and often negatively correlated to the returns of the typical hedge- fund strategy,” Bystrom said. “The opportunity set expands dramatically in times of higher volatility, when most other asset classes are not performing well.”
The Chicago Board Options Exchange Volatility Index, known as the VIX, has fallen 38 percent this year. Lower volatility may persist through the U.S. presidential election and then the measure may rise by the end of this year and into the first quarter of 2013 as investors react to high unemployment, China’s economic slowdown and the European sovereign-debt crisis, Bystrom said.
The Hawksfield Capital Volatility Opportunities Fund will employ quantitative models for options valuation and volatility analysis, according to a presentation about the fund that was obtained by Bloomberg News.
Before MF Global, Bystrom, 41, was a portfolio manager at AM Investment Partners LLC, where he co-managed the firm’s Global Volatility Arbitrage Fund. Prior to that, he was a director at Merrill Lynch & Co. Inc. and BNP Paribas SA. He started his career in trading at Susquehanna International Group LLP.
Boyarsky, 40, has served as executive vice president of Improved Funding Techniques Inc., an actuarial and benefits consulting firm, for 12 years. He will be Hawksfield’s chief executive officer and Bystrom will be chief investment officer.
Bystrom and Boyarsky first discussed starting a hedge fund five years ago. After MF Global filed the eighth-biggest U.S. bankruptcy under Chapter 11 on Oct. 31, Bystrom knew the time was right to act on the plan, he said.
“It was an ongoing dialog and it was something I knew I would always do at some point,” Bystrom said. “When MF did go bankrupt, it presented me with the right opportunity to do it.”
Bystrom said it was “disappointing and frustrating” to be part of an organization brought down by “external forces” separate from his team. MF Global, run at the time by former New Jersey Governor and Goldman Sachs Group Inc. Co-Chairman Jon Corzine, filed for bankruptcy after a wrong-way $6.3 billion trade on its own behalf on bonds of some of Europe’s most indebted nations.
Hawksfield’s prime broker is Goldman Sachs.
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