* Frank Fehle leads 6 to alma mater - source
* Fehle to start in mid-October - source
* Was running $1.5 bln before BlueCrest went private -
By Maiya Keidan
LONDON, Oct 6 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
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
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.
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
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
Citadel also hired ex-BlueCrest Capital portfolio manager
Ashish Goyal to its global fixed income team, who will start
(Reporting by Maiya Keidan, additional reporting by Svea
Herbst; Editing by Alexandra Hudson)