Brevan Howard Is Said to Plan Hedge Funds Amid Client ExodusBy , , and
New pools will wager on volatility, interest-rate expectations
Firm is expanding its lineup as assets sink below $12 billion
Brevan Howard Asset Management, the hedge fund firm co-founded by Alan Howard that’s battling an investor exodus, is planning to start two more funds, people with knowledge of the matter said.
The money manager has been marketing a fund designed to profit from expectations of higher or more volatile interest rates, said the people, who asked not to be identified because the information is private. That fund is set to begin later this year. The second pool, also expected to start soon, will bet on rising volatility, the people said. A Brevan Howard spokesman declined to comment.
Brevan Howard is allowing top money managers to run their own funds again after the firm’s assets slumped to less than $12 billion from a peak of $40 billion four years ago. The move is part of a shift in strategy by Howard’s firm -- one of its top executives said less than two years ago that running multiple funds was a “distraction.”
Brevan, which follows economic trends to bet across asset classes, is seeking to tap into growing capital flows into the industry. Investors are returning to bet that a normalization of interest rates will boost trading opportunities for hedge funds. The industry raised $38.7 billion this year through August, rebounding from almost $112 billion in withdrawals in 2016, according to data compiled by eVestment.
Howard is taking an approach similar to that of Paul Tudor Jones, whose firm recently raised about $300 million for a macro fund run by one of his top money managers, Dharmesh Maniyar. The fund uses machine-learning algorithms to help Maniyar trade. Tudor too is facing redemptions. Its assets have fallen by half to $7 billion since June 2015.
Brevan Howard closed more than half a dozen hedge funds in the three years through 2015 so that it could focus on its main fund. That pool is under-performing peers, losing 4.6 percent this year through September. Its assets have shrunk by about three-quarters from their peak to $6.8 billion at the end of August, according to investor letters.
In a bid to reboot his firm, Howard started a fund directly managed by him in March to trade a combination of new, outside capital as well as money from the flagship fund. The Brevan Howard AH Master Fund was said to have had $700 million pledged by investors. The firm is also preparing a macro fund run by Alfredo Saitta and two analysts that’s set to start this quarter, Bloomberg reported earlier this year.
Brevan Howard last year launched a securitized-products fund run by Josh Bertman, while Giles Coppel, who left the firm earlier this year, still runs an allocation for Brevan Howard Master Fund.
Macro hedge funds are making a small comeback after years of poor performance. They made money in eight of the last nine months and were up an average 2.8 percent through September this year, according to Eurekahedge. Investors are returning too, with macro money pools raising $17.9 billion through August, the most by any hedge-fund strategy, eVestment data showed.