British Hedge Fund Manager Tops 2012 Poll and more...

British Hedge Fund Manager Tops 2012 Poll

Alan Howard, founder of Brevan Howard, has come out on top in a poll of Britain’s richest Hedge Fund managers in 2012. With a personal fortune of $2.2 billion, Howard topped the list ahead of David Harding of Winton Capital Management in second place. A star trader at Credit Suisse First Boston before he co-founded Brevan a decade ago, Howard has overseen a period of incredible growth at one of the world’s most successful funds.

Insiders claim the firm has grown 262% since the start of 2007 and is rumoured to have generated fees of about $1.5 billion last year. Howard, 49, has based his success on trading. About 80 of the 400 staff are traders and the culture has been described as “the purest expression of the lion-hunter ideology: kill or be killed”. The research was conducted by Hedge Forensics, working alongside The Sunday Times newspaper.

King of the Hill

Howard founded Brevan Howard in 2003 in Marks & Spencer's former headquarters on Baker Street, London, and has grown to become one of the world's top five hedge funds. Howard’s strategy of being on international financial trends has seen them grow while many of their rivals have suffered. Howard, who is a diminutive 5ft 5in, admitted he prefers to minimise publicity: "We're a company that prefers to have a low profile. That's just the way we are.”

Brevan Howard’s staff are split between London and Geneva and it manages $60bn worth of assets. Brevan has already begun staffing its newly-opened New York office, having all but walked away from the United States in 2008. The new branch opened in June and now employs 16 people, including up-and-comers Josh Bertman and Don Carson, both formerly of Credit Suisse. The New York office will initially manage US$800m.

Harding Fortunes Rises Beyond $2bn

Harding, in second place, is a former Cambridge physicist whose Winton Capital Management has propelled him to a $1.4bn fortune. The 51-year-old launched his London hedge fund in 1997. Profits soared to $350m in 2011, while assets under management also grew, from $17bn to $28bn.

Best of the Rest

A number of the industry’s big-hitters also make the list with Michael Hintze of CQS ($920m), Crispin Odey and Nichola Pease ($722m) of Odey Asset Management, and Sir Paul Ruddock of Lansdowne Partners ($428m). While some from outside investment circles, such as Andy Hall of Astenbeck Capital ($419m), William Arah of Marathon ($3490m) and Yan Huo of Capula Investment ($317m) are also included.

London Rivalling New York

London is now widely regarded to be the world’s second hedge fund centre, only narrowly behind New York.

Britain’s 650 active funds now manage about $396 billion of client money, and employ more than 8,000 staff. Rank-and-file workers earn on average $381,000 a year, while the owners and star managers make around $3.1 million.

What Does 2013 Hold?

Despite the success of managers such as Howard and Harding, there are warnings that 2013 will once again be hard going for London’s hedge funds, with bumper profits likely to be hard to come by for many. 
Saker Nusseibeh, CEO of Hermes Fund Managers, believes the $2 trillion industry, faces a headache making money in an environment where markets are choppy and the interest on fixed-rate bonds has slumped.

"We're now in a world where we recognise that the ability to make money is a lot more difficult and there aren't that many people who can do it. There simply aren't enough, it just doesn't exist," he said. "Lots of hedge funds are not making even a positive return. They should be doing 4-5 per cent. And they're not . I suppose it's the smartest people with the smartest models, and they've had 10 years' practice."  

According to Hedge Fund Research's HFR index, hedge funds made huge returns most years between 1991 and 1999. However, funds have lost money in two of the five calendar since, although in 2012 the average fund is up 2.24%.

Giordano Lombardo, group chief investment officer at Pioneer Investments, said: "The hedge fund world is going to be more regulated and that will force out of the market players not willing to play the game in that way."