June 24, 2011, 12:31am
Alternative fund managers represent one of the fastest-growing and most in demand areas of investment management. Demand for hedge funds from institutional investors is climbing rapidly thanks to their above inflation returns and low correlation to stock and bond markets. The global industry is now worth more than £1.2 trillion and looks set to shape the investment landscape more and more in future. Our list includes two activist funds because they have risen to the fore to keep corporates on their toes.
A star performer, BlueCrest is one of Europe’s largest and most successful hedge funds with $25bn (£15.3bn) of funds under management. Its hedge funds are widely regarded to have had a successful year.
BlueCrest is valued at about $2.5bn, according to the $633m price tag on the 25 per cent stake it bought back from Man Group in March and has refused to submit to the rule that big funds cannot deliver top returns.
While opening a Geneva office it has also defended London as a hedge fund hub and still bases 240 of its 380 staff in the City.
Its management also bought back Man Group’s stake to gain total ownership of the firm – a vote of confidence in its future success.
Laxey Partners has been established 13 years and earned a reputation as a feared corporate raider through agitating at companies such as Wyevale Garden Centres and British Land to raise their share prices.
It is also known for buying into investment trusts with hefty discounts, forcing them to restructure, buy back shares or wind up. This year it took a 1.5 per cent stake in Alliance Trust, demanding it bring in a mechanism to control its 20 per cent share price discount. Five months and £50m of share buybacks later, the discount is 15 per cent or less and the share price has gained almost five per cent.
Its latest target for boardroom change is Singapore’s UIS.
Europe’s biggest hedge fund, with $32.6bn (£20bn) under management, Brevan Howard is now the world number four and still growing.
Its three London-listed tributary funds – BH Macro, BH Global and BH Credit Catalysts, which listed last November – feed into a multi-fund empire.
Its master fund holds more than $25bn under management and delivered returns of roughly 20 per cent in both 2008 and 2009, giving Brevan one of the best long-term performances in its peer group. Credit Catalysts reported a 13.5 per cent jump in net asset value in the year to December, while the others saw smaller gains. It has offices around the world, including London, Geneva and Hong Kong.
Man Group’s fortunes have really turned in the past year. Funds under management, which took a tumble in the aftermath of the credit crunch, have risen three per cent since the start of 2011 alone to take its mammoth total to $71bn (£43.6bn).
Man has made some smart moves to revive its performance: it paid $1.6bn in November to buy highly successful smaller rival GLG Capital and become the world’s largest listed hedge fund.
That has paid dividends – by March, it had returned to positive fund flows with $700m net coming in.
It also banked $633m from the sale of its 25 per cent stake in smaller fund BlueCrest Capital that month – and in May news that it had raised $2bn from Japanese investors for its Nomura Global Trend fund caused its shares to soar.
Sherborne, the brainchild of serial fund manager Edward Bramson, is another activist to leave its mark on the FTSE 100 in the past year. It began buying into F&C Asset Management last August and called for a board shakeup to kick-start the firm’s performance.
Its analysis of F&C’s share price discount, its acquisition strategy and debt profile won over institutional investors including Aviva and M&G.
While F&C’s board criticised Bramson’s refusal to articulate a strategy for the firm, about 70 per cent of its shareholders voted to add three new directors, including Bramson as chairman, to F&C’s board.
It moved Sherborne from a £105m IPO in 2010 to control of an £106bn asset manager. Bramson’s review of F&C’s strategy will report soon.