Tue. May 24th, 2022


Brookfield Asset Management is expanding its hedge fund business to Europe as the Canadian investment group bets on a trading strategy that has yielded excellent returns for some of the industry’s biggest names during the pandemic.

The Toronto-based firm’s Brookfield Hedge Fund Solutions Advisors are a multi-strategy unit trading areas such as stock market neutral and event-driven, a profitable corner of the industry dominated by the hold of Citadel and Millennium Management.

Until now, the low-profile company, which has assets of about $ 1 billion, has established all its trading teams in New York. But it is now opening an office in London for its hedge fund business and has started renting, according to people familiar with the matter.

It has recruited William Rushmer, a former partner at Mayfair-based investment firm CZ Capital, to execute a long-term British equity strategy in London, and plans to expand the business further, one of the people said. .

The move by Brookfield, which manages some $ 650 billion in assets worldwide and is best known for its real estate, infrastructure and private equity investments, will increasingly set itself against some of the biggest, most well-established names in the multi-manager hedge fund sector.

Such funds, which employ tens or even hundreds of small teams of traders, have enjoyed a strong period of performance and attracted billions of dollars from investors.

Ken Griffin’s $ 43 billion Citadel, last year, earned 26.3 percent and made money on credit, commodities, equities, fixed income and macro, and quantitative strategies. In 2020, it made 24.5 percent.

Izzy Englander’s Millennium Management, which has $ 52 billion in assets, gained about 13 percent last year, after reaching 25.6 percent in 2020, its best performance in two decades, while Steve Cohen’s Point72 and Balyasny also made progress last year. made.

Funds have been aided by their asset diversification, an ability to reduce risk quickly as conditions deteriorate or to fire underperforming managers, and sharp price movements in areas such as commodities.

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Data group eVestment noted that “2021 will decline as a year dominated by multi-strategy hedge funds”, noting that the bulk of the hedge fund industry’s inflows went to this sector last year.

Such funds, which often give autonomy to trading teams within strict risk limits, gained an average of 10.5 percent last year, according to eVestment, just ahead of the overall industry average profit. Many investors favor these funds because of the low volatility of their returns and their ability to make money, even when managing a large asset base.

The success of such funds during the pandemic has led to a severe battle for talent, which has pushed payouts for top traders sky high. Payments only to compensate top traders when they leave a competitor, for example, can now amount to $ 10 million and sometimes as much as $ 20 million.

Brookfield’s hedge fund business, led by Jason Siegel in New York, began operating in 2019.

The Canadian group as a whole has been investing in Europe for almost 20 years. Its assets in the region, which include real estate, infrastructure and renewable energy, rose from $ 6 billion in 2013 to about $ 110 billion.

Brookfield declined to comment.

laurence.fletcher@ft.com



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