Barclays Global Investors is creating a hedge fund-of-funds operation that likely will launch new strategies later this year.
The move is in response to strong institutional client demand for pure alpha products, said Stan Beckers, managing director and the London-based head of BGI's alpha management group. BGI's internally managed multistrategy hedge fund now has about $1.5 billion under management and likely will reach capacity of about $3 billion fairly soon, Mr. Beckers said. A target size has not been set for the hedge fund of funds, but Mr. Beckers noted that "this is not worth doing unless it puts BGI on the map and among the largest players in the industry."
BGI will apply the same quantitative and analytical approach to selecting outside hedge fund managers "that will provide non-directional, diversified, skill-based sources of alpha" that it now uses for equity selection, Mr. Beckers said. The new hedge fund of funds will also serve as the source of alpha generation for BGI's portable alpha strategy, he confirmed.
BGI is in the process of hiring staff the fund-of-funds effort, which will be based in London and BGI's recently opened New York office.
Jonathan Morgan was named managing director and head of the new hedge fund-of-funds unit. He was CIO of the alternatives business at Julius Baer Investment Management. William Marr, Baer‘s global head of alternative investments, said he was not authorized to speak to the press and spokeswoman Rebecca Quibic did not return a call seeking information on Mr. Morgan's replacement.