Brevan Howard is making money for its billionaire co-founder Alan Howard and other partners through more than just hedge fund fees.
The investment firm best known for running macro trading strategies has persuaded the likes of SoftBank Group Corp., hedge fund Penso Advisors and 15 others to use its high-tech operational infrastructure that once only served as the trading backbone for Brevan Howard's more than $40 billion in assets.
The Brevan Howard platform, which was spun off in 2018, is similar to the pioneering Aladdin software that BlackRock Inc developed. The unit, called Coremont, has grown to service more than $50 billion in assets for mainly alternative money managers trading everything from stocks and bonds to cryptocurrencies, Coremont CEO Jev Mehmet said in an interview.
"What was built is scalable, so we thought there was definitely mileage in extending the platform to the wider investment community," he said, adding that he expects to double assets and clients in three years.
From offering bespoke investment strategies and prized research to letting external clients use the plumbing that drives trading, hedge funds have been laboring to ease pressure on revenues as investors demand a better deal from an industry notorious for charging high fees.
For Brevan Howard, the additional revenue — a few basis points of every $100 that goes through Coremont — is a vital source of fees after it saw a vast majority of its hedge fund assets flee since the peak in 2013. Assets have only now started to rebound from a low of about $6 billion two years ago after the firm posted one of its best-ever gains last year.