New Hedge Fund Start-Ups Few and Far Between

July 30, 2013 Ryan James Hedge Fund News

Due to stricter regulations and the difficulty raising capital, hedge fund managers who otherwise may have ventured out on their own, are instead joining some of the world’s largest and most prestigious investment firms.

For example, Marshall Wace, a hedge fund firm whose assets have grown 60 percent during the past year to $10.7 billion, is about to embark on a recruitment drive for managers throughout the US. Marshall Wace is looking to hire about a dozen new employees, including portfolio managers. They are also planning a move from their main US office in Connecticut to midtown Manhattan.

Cancelling his plans to launch his own hedge fund, Chris Boas, a former global head of credit at Citadel’s securities unit, decided to instead join CQS as a senior portfolio manager. Also joining CQS this past May was Zacharias Bobolakis, who also was going to open his own hedge fund. Bobolakis was a former managing director and proprietary trader at UBS.

One of Marshall Wace’s US-based partners, Michael Sargent said, “The barriers to setting up your own fund are substantially higher than in 2007 because of more regulation, a difficult capital-raising environment and higher cost of doing business. We expect to benefit from that as a home for talented portfolio managers.”

According to data from the trade journal EuroHedge, 2012 saw the lowest number of new European offshore hedge funds launched since 2000, the year they began surveying the industry. A total of 86 new funds were launched, with the average size of a new fund being more than $100 million. Less than ten years ago the average start-up hedge fund launched with only $50 million. Analysts say that these two trends are a result of the new, high barriers to entry into the industry.

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Chris Boas, CQS, Marshall Wace, UBS, Zacharias Bobolakis,

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