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9 months ago
MOVES-Citadel hoovers up team that once ran one-fifth of BlueCrest Capital -sources
October 6, 2016 / 6:31 PM / 9 months ago

MOVES-Citadel hoovers up team that once ran one-fifth of BlueCrest Capital -sources

4 Min Read

* Frank Fehle leads 6 to alma mater - source

* Fehle to start in mid-October - source

* Was running $1.5 bln before BlueCrest went private - source

By Maiya Keidan

LONDON, Oct 6 (Reuters) - The team running almost a fifth of former leading European hedge fund BlueCrest Capital's $8 billion in assets when it announced plans to go private last December have left for U.S. rival Citadel in one of the biggest mass departures to date, three sources told Reuters.

Hedge funds have struggled as of late, with weak returns and mass redemptions from investors leading to fee cuts and a push for more innovative strategies.

The move sees BlueCrest Head of Quantitative Equities Frank Fehle return to his old employer after a break of seven years and leaves BlueCrest focused on the core strategy of betting on macroeconomic trends, which made founder Michael Platt famous.

Platt, whose firm managed $30 billion at its height, has decided not to replace Fehle and his team and will close the remaining parts of its quantitative equities business, the first source said.

BlueCrest did not return emailed requests for comment.

London-based BlueCrest, which made more than $22 billion for investors in the 15 years since it launched, had seen billions of dollars leave and assets stood at $8 billion when Platt told investors in a letter on Dec. 1 that he was handing their money back.

Fehle, who helped Leda Braga run the firm's BlueMatrix fund before she left to set up Systematica in 2015, led its successor, the BlueCrest Quantitative Equity Fund, until the firm announced plans to close to external investors in December last year, the first source said.

Fehle chose to leave and passed up the option of starting his own firm for a return to Citadel, the first source said.

Striking out on your own has become increasingly tough amid rising regulatory costs, prompting many to prefer to join a larger firms who can provide security and back office support.

Total new launches in 2016 are on track to be the lowest since 2009, data from industry tracker Hedge Fund Research (HFR) showed, with only 406 new funds launched in the first half of 2016 compared with 530 fund closures.

Macro hedge funds are up 1.99 percent on average to the end of August while equity quantitative funds which bet on prices moving in a certain direction, as opposed to arbitrating small price difference, are up 2.35 percent, HFR data showed.

Exodus

Fehle's departure follows that of former partners Frederic Favre, Alexandre Germak and Melanie Owen, who launched Alpstone Capital earlier this year.

Also heading to the exit earlier this year was hedge fund trader Nikolay Aleksandrov, who left to Switzerland-based Argentiere Capital.

The departure of Fehle and his team of six is believed to be the biggest yet, though, according to the second source.

"As of yet, I think this is possibly the biggest team to leave BlueCrest," a prime brokerage source at a leading investment bank said.

Fehle, who starts at Citadel in mid-October, will be moving to its Chicago office from Geneva where he will lead his team within the Global Quantitative Strategies (GQS) team, the third source told Reuters.

GQS is one of Citadel's businesses that deploys capital from its multi-strategy funds, said the source.

He will be overseeing three other former BlueCrest employees, moving from Geneva, out of London, and three out of New York, who were previously based in the U.S. city, said first and third sources.

Among the BlueCrest alumni to join Fehle are former portfolio managers Nanthan Thayananthan and Robert Giannini, who will lead the teams from London and New York, respectively, said the first source.

It is not known how much Fehle and his team will be managing for Citadel.

Citadel also hired ex-BlueCrest Capital portfolio manager Ashish Goyal to its global fixed income team, who will start next month. (Reporting by Maiya Keidan, additional reporting by Svea Herbst; Editing by Alexandra Hudson)

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