By James Williams – Last week Newedge announced that Leslie Richman and Duncan Crawford had been appointed co-Global Head, Alternative Investment Solutions (AIS) group, a part of Newedge’s Prime Clearing Services.
In other key appointments, Keith Johnson becomes Global Head of Capital Introductions. Johnson will be based in Chicago, along with Richman, with Crawford based in London, from where he has been running Capital Introductions globally for the past 12 years. Richman has been running AIS in the US for almost 20 years.
Speaking with Hedgeweek, Crawford notes that merging the two sides of the business represents a particularly exciting time for the firm. “Being a pure agency broker we have no proprietary trading and are therefore un-conflicted and well positioned to service customers, at a time when they are increasingly concerned with counterparty risk.”
Adds Crawford: “Both Leslie in the US with Calyon Financial, and I in London with Fimat, were founding partners of the Prime Brokerage Businesses at our respective firms; too many years ago! With both firms having fully integrated to form Newedge over four years ago, the synergies of our two legacy businesses are now being fully capitalized on.
“We have already taken a considerable share of the global prime brokerage pie and are confident we will continue to grow this share, servicing the hedge fund community globally.”
Both Richman and Crawford report to Chris Topple, Global Head of Prime Clearing Services at Newedge. Commenting on their co-Global Head role, Topple said: “The new structure reflects our strong focus on best of class client service on a truly global level and further enhancing our core offerings.”
AIS provides solutions that combine global expertise in listed derivatives, securities and liquid OTC, centralised clearing, and has an in-depth knowledge of the needs of CTAs, hedge funds, FoHFs, family offices and other investors focused on the alternatives space.
Servicing CTAs is a core part of the business, although as a strategy managed futures only represents about 35 per cent of the P&L at Newedge. Crawford notes that non-correlated strategies like managed futures are more in favour with investors today, compared to pre-2008.
“There is a true hunger to get a better understanding of this space. At the same time CTAs are focused on raising assets. With our 20-plus years of advise and research in the space, we are ideally positioned to assist, educate and connect,” confirms Crawford.
Of the USD60billion raised by CTAs last year, the majority of that inflow came directly from end investors such as pension funds, which shows that the awareness and understanding of managed futures is growing. Many investors know which managers they would like to allocate to, says Crawford, they just require a catalyst such as a reasonable run on returns.
Quantitative strategies such as equity statistical arbitrage are another area that Crawford thinks will see continued growth, as investors get more up to speed. Prior to 2008 there was a general belief among institutional investors that black box strategies (both CTAs and quant funds) were too difficult to understand according to Crawford, but that now seems to be changing.
“2008 was a watershed year, and allied with subsequent excellent performance has proved to be the catalyst for investment in quantitative strategies. We are now seeing a huge focus on this segment of the hedge fund universe,” says Crawford.
“For the remainder of 2012 I feel there could be a significant flow of assets from pension funds into quantitative, systematic strategies, although we do need the catalyst of a good run-up of returns.”