Mr. Tomlinson said the firm's philosophy has been to place investment and research staff where hedge fund managers are concentrated, and to place client service and support staff where clients are concentrated. Because so many hedge fund managers are based in the United States, it made sense to open a New York office, Mr. Tomlinson said. Beginning in 2001, New York-based research, investment and risk management teams were established, followed by compliance and client service teams.
The final step is a serious push for U.S. institutional clients. That's where Ms. McCabe comes in.
Ms. McCabe said she had been in the process of starting a U.S.-based hedge funds-of-funds company last year. She was talking to potential joint venture partners and considering how to staff her new company when she met with Mr. Tomlinson. They discovered each was trying to do the same thing.
"Blaine and I share a common vision for what we want to do. He's a visionary, and I need to work with visionaries. FRM has a great tool kit, amazing resources. I feel a little like a kid in a candy store. I've wanted to build a business where hedge fund investment is being optimized for sophisticated investors in the U.S. FRM is putting the right form and format together to suit U.S. investors," Ms. McCabe said.
Said Mr. Tomlinson: "We needed to find someone with deep knowledge of the U.S. market, who has experience with building a business, who has good relationships with people in the hedge fund business, who will get on well with the existing six management team partners in the firm …"
He added that FRM has to "deliver very high-quality investment management in partnership with the best clients. The U.S. growth strategy is very important to FRM because most of out competitors are in the U.S. We have to get it right as a foreign company coming into the U.S."
Mr. Tomlinson is right to concern himself with FRM's chief competition — U.S. hedge funds-of-funds managers, said David J. Bauer, principal, Casey Quirk & Associates LLC, Darien, Conn. Mr. Bauer noted that roughly half of the names of the world's 20 largest funds of funds are American.
"There are just a slew of really good U.S. hedge funds-of-funds managers for U.S. investors to select from. Especially in the public plan arena and for Taft-Hartley plans, as they start investing more in hedge funds … with all other things being equal, U.S. managers might have an edge in winning their business," Mr. Bauer said.
"European hedge funds-of-funds managers may not be doing so well in winning U.S. clients because there is so much home-grown competition. A European manager running a U.S. hedge fund of funds? What's the upside for a buyer, when they can get so easily get a U.S. manager running a U.S. fund? Not to knock European managers' ability, but it's a harder sell," he said.
But Mr. Bauer said hiring an American to head FRM's U.S. institutional effort was a good move. "They've got someone who knows the business, the players and is herself well-known in the hedge fund industry here. It makes a lot of sense," said Mr. Bauer.
An investment banker, who asked for anonymity, strongly agreed. "To be successful in asset management in Europe or the U.S., you need a European in Europe and an American in the U.S.," the source said.