Alan Howard Said to Create Brevan Fund Managed Only by HimBy
Fund to begin March 1, capped at $1 billion for outside money
Brevan Howard’s assets down to $15.6 billion from $40 billion
Billionaire Alan Howard, co-founder of the $15.6 billion Brevan Howard Asset Management, is creating a new hedge fund that will be overseen solely by him, according to people with knowledge of the matter.
The Brevan Howard AH Master Fund will manage a combination of new, outside capital as well as money from Brevan Howard’s flagship fund, said the people, who asked not to be identified because the plans are private. The outside money will be capped at $1 billion, and the fund will begin trading March 1, said one of the people. A spokesman for the firm declined to comment.
The fund will cater to investors who want direct exposure to Howard, 53, as well as -- or instead of -- Brevan Howard’s Master Fund, which is overseen by 34 traders, in addition to Howard. He joins Moore Capital Management’s Louis Bacon in creating a vehicle that’s just run by a firm founder.
“It is sometimes difficult for investors to understand the source of risk and return in a fund managed by multiple portfolio managers," said Nicolas Roth, co-head of alternative assets at Geneva-based investment firm Reyl & Cie, which invests in hedge funds. “The new fund surely addresses this problem by having only one risk taker."
The move comes as Brevan Howard and other macro hedge funds are under pressure to boost returns in an environment of low interest rates, central bank interventions and high fees. The flagship fund suffered almost three years of losses before a reversal of fortune toward the end of 2016 led to a gain of 3 percent for the year. Even so, investors lost patience with the fund, withdrawing $7 billion and bringing assets to $11.9 billion at the end of December.
Brevan Howard’s rough patch follows a decade of outperforming the market. The Master Fund gained more than 200 percent from its start in 2003 through the end of last year, beating the Eurekahedge macro index’s 173 percent advance. The hedge-fund firm has seen its overall assets shrink from $40 billion in 2013 to less than $16 billion at the end of December.
The outflows from the Master Fund continued in January as the money pool started the new year with a loss of 1.5 percent. The fund’s assets declined by about $888 million to $11 billion during the month, according to an investor letter.
Howard founded the firm in 2002 with four other traders from Credit Suisse Group AG’s proprietary fixed-income trading desk.