London hedge funds launch US offensive

The Thames River snakes through the city center past Tower Bridge in this aerial view taken from The Shard on March 21 2014 in London, United Kingdom

Winton Capital, Odey Asset Management and Cheyne Capital are among a growing number of London-based hedge fund groups homing in on the US market as the pool of assets available in Europe stagnates.

The cross-Atlantic push by some of the biggest names in the UK hedge fund industry comes at a time when US investors, in particular pension schemes, are significantly increasing their allocations to hedge funds.

Many of the groups that have scaled up their US operations privately admit that fresh sources of capital in Europe are increasingly difficult to access, in part due to tougher marketing requirements under the Alternative Investment Fund Managers directive.

Cheyne Capital, one of the largest UK hedge fund managers with $6.5bn of assets, opened a New York office in January with a handful of sales and marketing employees. The multi-strategy house is “looking to expand” through hiring, a spokesperson says.

Winton Capital, one of the largest hedge fund groups in the world with $25bn of assets, also opened its first New York office last month with six employees.

The quantitative-focused manager, founded in 1997 by Cambridge-educated physicist David Harding, plans to shift some sales staff from its London headquarters to the US, which accounts for 40 per cent of its assets, by the end of the year.

Although the US is one of the most mature hedge fund markets in the world, accounting for half of global assets, Troy Gayeski, senior portfolio manager at SkyBridge, a New York-based fund of hedge funds, believes the UK set had a chance of succeeding.

“Europe is going out of its way to make it difficult for investors to invest in hedge funds. The US is still the largest market with the deepest pools of capital and [UK hedge funds] would be crazy to not at least try to expand,” he said.

Don Steinbrugge, managing partner at Agecroft Partners, a hedge fund consultancy, says: “US pension funds shifting money from fixed income into hedge funds is fuelling growth, and most large European hedge funds would like some exposure to that.”

Cube Capital, a $1bn London-based alternative investment house, also plans to open an office in New York or Boston in 2015 after hiring its first US director of marketing, Stephen Petretto, in June.

Peter Madsen, managing director at Cube Capital, said: “The US is a huge market for us, while regulation in Europe is becoming more stringent and opportunity is not as great”.

Elsewhere Odey Asset Management, which opened its first New York office last September with two members of staff, plans to hire up to four US-based employees in the next 18 months.

CQS, the $8bn hedge fund group founded by Sir Michael Hintze, and Polygon, a $12bn multi-asset hedge fund business, are already established in New York, but both confirmed plans to expand their US teams as marketing conditions continue to improve.

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