Platt’s BlueCrest Gains 40% in ‘Exceptional’ Trading Yearby , , and
Fixed-income trading and leverage helped BlueCrest make money
Hedge fund firm decided to return client money last year
Billionaire Michael Platt’s BlueCrest Capital Management has gained about 40 percent this year after his investment firm decided to return all client money and trade with high levels of leverage.
"2016 has been an exceptional trading environment in fixed income and BlueCrest has been aggressively positioned throughout this period,” Platt said in an e-mail to Bloomberg News. Borrowings “have played a strong part in generating these returns,” he said.
The gains contrast with poor returns generated by some of the largest hedge funds, leading to a widespread backlash by investors who have pulled about $60 billion this year and forced money managers to cut fees. Hedge funds gained 3.6 percent through October, according to data from Hedge Fund Research Inc.
BlueCrest said in December it would return external capital to focus on managing Platt’s wealth and that of his partners, giving itself more flexibility to trade and reward employees.
Jersey, Channel Islands-based BlueCrest produced more than $22 billion in trading profits for investors during its 15 years running hedge funds. The firm’s assets peaked at more than $37 billion in 2013. Two years later and after a rocky few years for its hedge funds, Platt decided to return external money.
The move came after BlueCrest investors pulled billions of dollars from the firm, with assets under management falling to about $8 billion in December last year. Platt, 48, said the decision to stop managing external money was prompted by the declining fees and shrinking profitability of hedge funds.
The firm’s internal BlueCrest Staff Managed Account fund continues to invest money in fixed income, currency and credit-trading strategies. It also kept its stock fund led by Christian Dalban and an emerging markets fund. All other money pools were closed and BlueCrest said earlier this year that it expected to return more than 92 percent of client cash by the end of September after missing an earlier repayment target.
Following its decision to become a private investment firm, BlueCrest raised the percentage of profits that its money managers can earn in its effort to hire and retain top traders.