UBS AG, Switzerland’s biggest bank, promoted Dawn Fitzpatrick, the investment chief of the firm’s $5.2 billion O’Connor hedge-fund business, as the company seeks to increase assets under management.
Fitzpatrick, 43, will take on all responsibilities for running O’Connor and will report directly to John Fraser, who runs the Zurich-based bank’s global asset-management division, according to an e-mailed statement. Bill Ferri, 47, who was Fitzpatrick’s boss as head of the Alternative and Quantitative investments business, will instead focus on running the $25.4 billion fund-of-funds unit, according to the statement.
UBS is changing O’Connor’s structure after a clampdown on cash bonuses helped spur trader defections. The lender revamped its compensation in February, paying some bonuses in bonds that only vest after five years and can be wiped out if the firm has a capital shortfall.
The Alternative and Quantitative business, which comprised O’Connor and the fund-of-funds unit known as Alternative Investment Solutions, will cease to exist. Ferri, 47, will oversee the management of AIS, where Bruce Amlicke will continue to work as chief investment officer. Fitzpatrick and Ferri are both based in New York.
“It puts both businesses strategically in a way that they have the highest degree of success,” Fitzpatrick said in an interview today.
O’Connor has hired four portfolio managers and three other investment professionals in the past eight weeks, according to UBS. They include Nilay Shah, who joined O’Connor’s Chicago office from Ivory Investment Management LP at the end of July, and Meraj Sepehrnia, who came to the London office from Carrhae Capital LLP last week, UBS said.
The unit also started a new investment strategy Aug. 1 that bets on rising and falling Asian stock prices, Fitzpatrick said. O’Connor employs more than 100 people globally across its funds, which wager on stocks, bonds and corporate mergers.
At least seven portfolio managers have left O’Connor this year to join hedge-fund firms, including BlueCrest Capital Management LLP, Millennium Management LLC and Tudor Investment Corp., people with knowledge of the matter said in May. In June, O’Connor began cutting 16 of 46 jobs at an equity fund, while adding traders focused on corporate bonds, said another person with knowledge of the matter.
At the time, a UBS spokeswoman said O’Connor regularly reviews its hedge-fund business to ensure it has the right mix of traders to invest in asset classes where the firm expects the best returns.
UBS will also try to expand its fund-of-funds business by hiring and adding investment strategies, Ferri said in the interview today. The unit will probably try to raise money from clients to buy stakes in hedge funds, he said. Fund-of-funds typically charge clients an extra layer of fees to pick hedge-fund investments.
UBS’s hedge fund and fund-of-funds businesses manage clients’ money, not the bank’s own.
The decision by UBS to tie some deferred pay to contingent capital bonds, which can be written down if the bank’s common equity ratio falls below 7 percent or it needs a bailout, prompted some O’Connor traders to complain that hedge-fund bonuses should be linked to the performance of their investment funds, one of the people with knowledge of the matter said in May. The bank then reduced the portion of O’Connor pay that would be linked to the bonds, the person said.