Following the transition, BlueCrest will manage assets solely on behalf of its partners and employees.
It will continue to trade all current major strategies and retain all the firm’s offices around the world and anticipates strong growth in employees and AUM over the next several years under the new business model.
During its 15 year history, BlueCrest has delivered trading profits of over $22bn for its investors, and has won numerous industry awards for excellence. It has built an industry leading global team of over 250 investment professionals in nine offices operating in fixed income, currencies, emerging markets, credit and equity trading.
However, ongoing secular changes in the industry, including trends in fee levels, the cost of hiring the best trading talent, and the challenges in tailoring investment products to meet the individual needs of a large number of investors, have weighed on hedge fund profitability. A Private Investment Partnership strategy of concentrating on a reduced number of funds, managed exclusively on behalf of BlueCrest’s partners and employees, will facilitate higher returns and greater profitability for the firm’s stakeholders, and give it greater flexibility to compete aggressively for trading talent.
BlueCrest’s existing partner fund, BSMA, will continue to hold assets managed in the fixed income, currency and credit trading strategies, and the BlueCrest Equity Strategies Fund and the BlueCrest Emerging Markets Fund will be retained as the vehicles through which partners and employees invest in equity market and emerging market trading strategies respectively. All other funds, including BlueCrest Capital International, and the AllBlue Fund, are expected to close during 2016.
The process of closing the client funds has been agreed with the Boards of Directors of those funds and communications with clients as to the timetable is now taking place. Clients are expected to receive approximately 75% of their investment capital before the end of January and 90% by the end of Q1 2016. The divestment of investment portfolios will be carried out in an orderly manner, balancing the requirements for speed and value for investors.
BlueCrest’s founder and Chief Executive, Michael Platt, said:
“Firstly, I would like to thank all of the investors who have entrusted money to the BlueCrest funds over the last 15 years and to wish them well in their future investment endeavours.”
“We are embarking on an exciting new phase in the development of BlueCrest. We will be stronger and more flexible under our new business model, and see exciting opportunities to grow significantly in terms of numbers of trading teams and assets under management. The new model provides the opportunity to create significant value for our partners, our traders and our staff, due to a step-change in our profitability. It will also allow us to enhance further our ability to attract the highest quality investment talent in markets across the globe. We have delivered industry-leading returns to our investors over the past 15 years but believe that BlueCrest is now better suited to a Private Investment Partnership model.
We have always been an industry innovator, and this transition will be no exception. We have sold and repurchased a stake in our business, we have seeded new strategies using bank loan financing, and been among the first to launch a permanent capital vehicle in the UK. We seeded and spun out BlueMountain Capital and more recently have spun out and divested of a significant stake in Systematica, a major business division. This transition, though not unique, will make us one of the largest and most diverse managers to adopt a Private Investment Partnership model.”