LONDON Fixed-income relative value managers at hedge fund Capula Investment Management LLP see great investment opportunities ahead, and the firm is among those actively seeking institutional capital.
The London-based firm was co-founded in 2005 by Yan Huo, chief investment officer, who was the head of European proprietary trading at JPMorgan Chase & Co., New York.
Mr. Huo developed and traded JPMs fixed-income relative value strategy during his tenure there and persuaded most of his former team members to join Capula, said Ali Saiedabadi, a Capula co-founder and head of business development.
According to Mr. Saiedabadi, the flagship strategy fund, the Capula Global Relative Value Fund, focuses on fixed-income relative value and arbitrage and invests in the most liquid government securities in the U.S., Europe and Japan, as well as interest rate swaps, exchange-traded futures and options.
While the firm carefully controlled growth in its first three years by phasing in investments, it now has $4 billion. But Mr. Saiedabadi said because the underlying investments are so liquid and priced daily, the investment team can handle significantly more capital. The current client mix is about one-third institutional direct investors and about two-thirds intermediaries, including hedge fund of funds.
The funds annualized net performance of 15% since inception in October 2005 is meeting its target, and its 7% annualized volatility is in the target range of 5% to 10%. That strongly positive performance has brought the fund to the attention of many hedge fund-of-funds managers, but the focus going forward will definitely be on attracting more direct institutional investment, Mr. Saiedabadi said. A fall tour of the U.S. is planned to talk to consultants and investment executives from pension funds, endowments and foundations. Christine Williamson