Photographer: Gianluca Colla/Bloomberg

Credit Suisse Plans to Spin Out a $1 Billion Quant Hedge Fund

Updated on

Credit Suisse Group AG’s asset management business plans to spin out a $1 billion quantitative hedge fund later this year, according to a person familiar with the matter.

The Qube Fund, which uses computer models to trade stocks, will be managed by Credit Suisse Quantitative and Systematic Asset Management, which will be a separate group as part of a management buyout, said the person, who declined to be named discussing firm matters. QSAM’s team will be located in London, Paris, Hong Kong and Mumbai.

The deal traces its roots to the Systematic Market-Making Group, or SMG, a unit within Credit Suisse’s equities-trading business that Chief Executive Officer Tidjane Thiam decided to move into the asset-management division last year. SMG made wagers with the bank’s money, a practice known as proprietary trading, that regulators have restricted since the financial crisis. The new rules have prompted lenders to pull back from the business.

The Qube Fund started late last year and is staffed by former proprietary traders drawn from SMG. The majority of QSAM is now being sold to its management team headed by by Pierre-Yves Morlat, who joined Credit Suisse as head of proprietary arbitrage trading for Europe and Asia in 2009. The deal to spin out the fund is due to close in the fourth quarter, the person said.

HFMWeek reported the news earlier on Tuesday.

Another Credit Suisse quant fund, the New-York based QT Fund, started trading in February and is led by Nick Branca, according to an investor presentation from that month. This fund is not affected by the move, the person familiar said.

Credit Suisse’s asset management operations, part of the international wealth management division, had 366 billion francs ($378 billion) of assets under management as of June 30. Adjusted pre-tax profits in the first half rose 6% to CHF 136 million, according to the bank’s second-quarter earnings statement.

Credit Suisse spokeswoman Candice Sun declined to comment.

    Before it's here, it's on the Bloomberg Terminal.