Brevan Howard Asset Management LLP, already widely acknowledged as the largest European pure-play hedge fund manager, is fast approaching the top of global hedge fund rankings.
Despite flat performance for the first six months of 2012, Brevan Howard moved up to the third spot in Pensions & Investments' most recent ranking of the world's largest hedge funds from fourth, thanks to net asset inflows of $5.7 billion in the year ended June 30 (P&I, Sept. 17).
So far, 2012 has been an active year for London-based Brevan Howard, which added new institutional clients such as the $47.9 billion Pennsylvania Public School Employees' Retirement System, Harrisburg; the $122 billion New York City Retirement Systems; the $3.7 billion Leona M. and Harry B. Helmsley Charitable Trust, New York; and the $69.9 billion New Jersey Division of Investment, Trenton.
Described as employing a “pretty simple strategy: We trade,” by Nagi Kawkabani, a Geneva-based founding partner, Brevan Howard's worldwide assets grew 18.4% to $36.7 billion in the year ended June 30. In just the next two months, the company's assets grew by an additional $1.3 billion to $38 billion as of Aug. 31.
“Trading focuses on near-term opportunities ... that we may hold between one and six months,” Mr. Kawkabani stressed. “Investing puts more focus on finding value. Trading is not a buy-and-hold strategy. We aren't at the interesting end of the investment spectrum.
“The commonality in Brevan Howard is trading,” he said, noting that 80 of the firm's 400 employees are traders and each represents a separate profit-and-loss center.
“Traders compete against the market and against other traders. High turnover is part of the business model. We give someone a chance, shorten the odds by providing them with the support they need, but we do have to cut traders when they are not performing,” Mr. Kawkabani said.