BlueCrest Capital, the investment firm co-founded by billionaire bond trader Michael Platt, more than doubled its money this year after betting that inflation and rising interest rates would hit debt markets.
The secretive group, which was once one of the world’s largest hedge funds before deciding in late 2015 to transform itself into a family office to take more risk in the markets, has returned 114 percent so far this year, according to a source familiar with it achieved with its returns.
Such a gain ranks BlueCrest as one of the world’s top-performing investment firms in what has been a volatile year for many hedge fund managers. While the total assets of the company are unclear, such returns are highly unusual for a group that manages billions of dollars in assets.
Hedge funds are down an average of 4 percent this year, according to data group HFR. However, some firms that trade in bonds and currencies, like Brevan Howard, Caxton Associates, and Rokos Capital, have managed to thrive — though not to the same extent as BlueCrest.
The return marks another boost to Platt’s personal wealth. That year, the Sunday Times Rich List put his personal wealth at $10 billion.
A large portion of BlueCrest’s gains this year have come from bets on the sharp sell-off in government bonds around the world as central banks have aggressively hiked interest rates in a bid to contain inflation.
Yields on 10-year Treasury bills have risen to 3.6 percent this year from less than 1.5 percent as the US Federal Reserve tightened monetary policy. In the UK, which has been hit by severe financial market turmoil in recent days, 10-year gilt yields have risen to 3.9% from under 1%. Yields rise when prices fall.
BlueCrest has also made money betting on emerging market assets, said another person familiar with the firm. BlueCrest declined to comment.
The firm had about $36 billion under management at its peak in 2012, but like many macro hedge funds that trade in markets dominated by central bank asset purchases, it suffered from several years of weak returns in its flagship fund. In late 2015, it announced plans to return outside investors’ money and become a family office — a firm that manages internal money — and manages billions of dollars in assets.
Platt said at the time that the switch meant his investment strategies would be less constrained by institutional investors who wanted lower-risk products.
BlueCrest has rallied for years as a result, eclipsing the performance of most hedge funds. US billionaire Louis Bacon also made big profits at his company Moore Capital after deciding to return money to outside investors.
Last year, BlueCrest Capital Management UK was fined more than £40m by the UK Financial Conduct Authority for “reckless” behavior in failing to manage a conflict of interest. Last year, the company agreed to return $170 million to former investors in a settlement with the Securities and Exchange Commission, which said it had given priority to an internal hedge fund over its flagship fund.
https://www.ft.com/content/7648fa7d-daa0-4053-87cd-79781569fef2 BlueCrest doubles its money in the bond market