BlackRock Inc., the world's largest money manager, is creating a hedge fund boutique within its vast investment management empire.
It is Carl Eifler's mission to push BlackRock from being almost an accidental hedge fund manager — albeit a really big one — with an eclectic array of funds to a powerhouse that spans the full spectrum of hedge fund strategies.
Mr. Eifler, managing director, said he has been working to “offer a small-firm atmosphere wherever the hedge fund (portfolio manager) is located within BlackRock.” He was named head of the hedge fund direct strategies group within the BlackRock alternative investments unit in March 2013.
“We are literally trying to reproduce a hedge fund boutique” without having to “rely on a prime broker to set up (the) infrastructure,” Mr. Eifler said.
He said one of the advantages to a large money manager like BlackRock offering an internal hedge fund boutique is the robust infrastructure and risk management systems institutional investors demand, and “you don't have to worry about distribution (and marketing) because BlackRock does that, too.”
Part of the process requires creating core hedge fund strategies. Another part is shifting how portfolio managers of the firm's multistrategy hedge funds tap into the alpha-generating capabilities of its existing single-strategy hedge funds.
Better known as a multiasset-class titan, with more than $4.6 trillion under management worldwide, New York-based BlackRock has been in the hedge fund management business since 1996. The firm managed $34.3 billion in 30 single and multistrategy funds as of June 30.
Although hedge funds account for a minuscule 0.7% of the firm's overall assets, BlackRock ranked sixth worldwide on Pensions & Investments' most recent listing of hedge fund managers, based on June 30, 2013, data (P&I, Sept. 16, 2013).