BlackRock takes on hedge fund giants
BlackRock to compete with hedge fund giants
The world’s largest asset manager might be best known for its dominance in the realm of index trackers, but BlackRock plans to take on the giants of hedge fund land.
The US fund group, which has $13.5tn of assets under management and is led by Larry Fink, is revamping its flagship quant hedge fund as it seeks to compete with industry stalwarts such as DE Shaw, Citadel and Millennium.
BlackRock is adding stockpickers to Systematic Total Alpha, its top mathematical and data-driven hedge fund, following a strategy pursued by multi-manager hedge funds that house human and computer-driven strategies under one roof, writes Costas Mourselas.
The quant fund is also expanding fundraising efforts to challenge larger rivals after securing the three-year trading record required by many allocators to invest.
STA had $7bn in capital to invest as of the end of October, up from $5bn in August, but is still a relative minnow compared with the multi-strategy firms Citadel and Millennium.
Between its launch in June 2022 and October this year it returned 14 per cent on an annualised basis, net of fees, a strong performance for a three-year period but one that STA will need to show it can maintain over a longer timeframe.
STA is only part of BlackRock’s wider hedge fund business, which has about $90bn in client assets, making it one of the biggest hedge fund platforms in the world. BlackRock has increasingly been investing in its alternative asset management business, having purchased private credit manager HPS for $12bn last year.
BlackRock does not plan to recruit from outside the group but to make use of existing employees elsewhere in its hedge fund business to help increase the stability of STA’s returns.