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Billionaire Michael Platt’s BlueCrest Capital is planning to expand its number of trading teams by 10 per cent by the end of the year after a run of performance in which the family office has trounced many of its macro hedge fund rivals.
The secretive investment firm is in talks with 30 portfolio managers across the industry, according to a person close to the matter, as a war for talent rages with multi-manager hedge funds such as Citadel and Millennium.
BlueCrest was once one of the world’s biggest hedge funds, managing as much as $36bn at its peak, before it returned investor capital and became a family office in 2015 after suffering losses and investor withdrawals in the early 2010s.
Without investors to answer to, the firm has been able to take more risk in the markets, an approach that has reaped rewards with performance that has beaten many of its hedge fund rivals. BlueCrest was up more than 20 per cent last year, according to the person, after gaining more than 150 per cent in 2022 betting that higher inflation and rates would hit bond values.
The family office is now hiring people to join its trading teams in macro, commodities, systematic strategies that involve trading with computers, and other areas.
BlueCrest now has roughly 170 “pods”, industry jargon for trading teams, up from about 150 halfway through last year, according to the person. Pods can range from a single portfolio manager to a bigger team with multiple analysts, with an average size at BlueCrest of two investment staff.
The popularity of multi-manager hedge funds has resulted in an escalating war for talent, which could make it tricky for BlueCrest — which shares some characteristics with such firms — to hit its target for additional trading teams.
Multi-managers typically employ tens or hundreds of portfolio managers to trade a wide variety of strategies, all supervised by a centralised risk team, and have been the fastest-growing part of the hedge fund industry for the past several years.
One BlueCrest insider said that because the firm keeps the gains on its bets rather than use them to pay investors, it is able to pay more than competitors.
While about two-thirds of the firm’s trading teams are focused on macro-related strategies, Platt has worked to diversify its capabilities into other areas such as commodities.
Huge volatility in commodities including natural gas, nickel and oil during the pandemic convinced many hedge funds that it was a growth area. BlueCrest has outposts that trade commodities in Houston, Austin and Dubai.
The firm has moved away from so-called relative value strategies, where traders exploit small price differences between bonds and derivatives to make money, as more hedge funds have piled in.
Regulators have sounded the alarm on a version of this strategy called the Treasury basis trade, where hedge funds use borrowed money to bet on the price of Treasuries and futures converging. US rules approved by regulators last year should bring down leverage in the strategy, theoretically making it less profitable.
BlueCrest employs about 600 people including non-investment staff, with offices in locations including London, New York, Jersey and Singapore.
There are signs the war for talent could cool, after some multi-manager hedge funds had a disappointing 2023. Rival macro hedge fund Brevan Howard cut roughly 100 jobs last month.
BlueCrest declined to comment.