Star bank traders struggle to shine with own funds - News and Current Events | futures io social day trading
futures io futures trading

Star bank traders struggle to shine with own funds
Updated: Views / Replies:293 / 0
Created: by kbit Attachments:0

Welcome to futures io.

(If you already have an account, login at the top of the page)

futures io is the largest futures trading community on the planet, with over 90,000 members. At futures io, our goal has always been and always will be to create a friendly, positive, forward-thinking community where members can openly share and discuss everything the world of trading has to offer. The community is one of the friendliest you will find on any subject, with members going out of their way to help others. Some of the primary differences between futures io and other trading sites revolve around the standards of our community. Those standards include a code of conduct for our members, as well as extremely high standards that govern which partners we do business with, and which products or services we recommend to our members.

At futures io, our focus is on quality education. No hype, gimmicks, or secret sauce. The truth is: trading is hard. To succeed, you need to surround yourself with the right support system, educational content, and trading mentors – all of which you can find on futures io, utilizing our social trading environment.

With futures io, you can find honest trading reviews on brokers, trading rooms, indicator packages, trading strategies, and much more. Our trading review process is highly moderated to ensure that only genuine users are allowed, so you don’t need to worry about fake reviews.

We are fundamentally different than most other trading sites:
  • We are here to help. Just let us know what you need.
  • We work extremely hard to keep things positive in our community.
  • We do not tolerate rude behavior, trolling, or vendors advertising in posts.
  • We firmly believe in and encourage sharing. The holy grail is within you, we can help you find it.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.

You'll need to register in order to view the content of the threads and start contributing to our community.  It's free and simple.

-- Big Mike, Site Administrator

Thread Tools Search this Thread

Star bank traders struggle to shine with own funds

  #1 (permalink)
Elite Member
Aurora, Il USA
Futures Experience: Advanced
Platform: TradeStation
Favorite Futures: futures
kbit's Avatar
Posts: 5,884 since Nov 2010
Thanks: 3,303 given, 3,334 received

Star bank traders struggle to shine with own funds

(Reuters) - Some of the biggest traders to have swapped working at a bank for running their own hedge funds are finding it much tougher on their own, with returns since they launched lagging rivals and disappointing investors.

Dozens of top traders have fled banks in recent years, spurred into launching their own funds instead as U.S. regulators seek to ban banks from trading with their own money on so-called "proprietary" desks.

Ex-Goldman Sachs stars Morgan Sze and Pierre-Henri Flamand, as well as traders from Credit Suisse, Morgan Stanley and Deutsche Bank are among those now playing markets with other people's money.

Investors rushed to get a piece of their investing know-how in some of the biggest fund launches since the crisis. But many are growing disappointed with their showing.

"The question is: ‘how much can you really rely on the fact they will be able to reproduce what they were producing inside the bank where they had a lot of insights about flows and about what the smart money was doing?'," said Michele Gesualdi, a London-based partner at fund of funds firm Kairos Partners.

"I am a bit skeptical from what we have seen so far."

Flamand has seen his $1.8 billion Edoma Partners, which makes bets on corporate news events, fall 3.1 percent to end-March since inception in November 2010, an investor letter seen by Reuters shows.

Hong Kong-based Sze's Azentus, the biggest launch in Asia last year - is down 4.8 percent in the 11 months to end-February, two industry sources said, while Benros Capital Partners, also run by ex-Goldman traders, is down 2.84 percent to end-March since its June 2011 launch, an investor letter showed.

This leaves the star managers lagging many of their rivals. Since Flamand launched the average fund in his sector, so-called event-driven funds, has grown 0.8 percent after a rebound in the number of corporate takeovers in the first quarter of the year, according to Hedge Fund Research.

Since Sze launched, the average event-driven fund is down a little over 2 percent, less than half Azentus's fall.

Others have fared even worse. Zoe Cruz, the ex-Morgan Stanley co-president, is shutting her Voras Capital hedge fund two years after it opened, a source familiar with the fund said. The fund has struggled to raise capital and last year it fell 8 percent while the average hedge fund lost 5.

Edoma and Benros declined to comment. Azentus and Voras Capital could not immediately be reached for comment.


The transition from in-house trader to hedge fund manager can be tough. For a start, managers quickly find themselves spending as much time on the practicalities of running a small business as they do running the investments.

They are also answerable to dozens of investors who demand regular updates on performance, positions and strategy.

Brian Singer, a former Americas CIO at UBS Global Asset Management, launched his own macro hedge fund, Singer Partners, in 2009 but has since taken his team to investment firm William Blair to give them more time to focus on investing.

"Unfortunately, you find when you have your own firm you actually don't get to focus as much time on investing as you think. We were doing a lot of back office, legal, compliance, marketing, none of which we were any good at," he told Reuters.

Perhaps more importantly, while bank "prop" traders are tasked with making money in all markets, they can also pull back into cash and wait for better opportunities if they believe markets are too uncertain and volatile for them to place their bets.

This contrasts with life outside a bank where traders must invest across market cycles to justify the fees they charge their clients.

Stay in cash too long and investors grow unhappy.

"I sympathize with managers in their first year as they are trying to establish a track record and may feel the pressure to trade to make a return," said Dave Matthews, who left Japanese investment bank Nomura to launch commodities hedge fund Avitah Capital last year. Matthews believes that pressure eases once a track record is established.

For investors, separating a trader's individual skill from success that owes itself to the benefits of working in a large, global bank, is hard.

Bank trading floors can buzz with talk of where "smart" money is headed. 'Prop' traders can also enjoy financing and execution costs which are lower than those now set by their prime brokers.

Therefore potential investors often have a tough time trying to figure out the contribution an individual 'prop' trader made to returns.

"As information (from former 'prop' traders) is not readily available, it definitely takes effort to try and figure out the true story," Lisa Fridman, head of European Research at fund of funds house Pacific Alternative Asset Management Company, said.


Nevertheless, several of the $2 trillion hedge fund industry's biggest names once ran money for a bank.

Alan Howard left Credit Suisse in 2003 to start Brevan Howard, now one of Europe's biggest hedge funds, while Michael Platt has grown BlueCrest into a more than $30 billion firm since leaving JP Morgan to go it alone in 2000.

Investors have also shown a willingness to back big-name traders recently even when performance has not been great.

Ex-Credit Suisse natural gas trader George "Beau" Taylor planned to close his Taylor Woods Capital Management commodity hedge fund to new investment at more than $1 billion, industry sources said in March, despite a difficult time in 2011.

After a year in which even the most experienced managers struggled to break even, Greenwich-based Taylor said in a letter to investors it had turned a corner, with the fund up 3.25 percent to March 9 this year, partly thanks to a shift towards bullish bets on the price of oil.

And Roger Ganpatsingh, a director at Throgmorton, which provides back-office services like accounting and human resources for hedge funds, including those starting out, said ex-bank traders continued to show an interest in launching on their own.

Where managers had decided to delay a launch it was typically because of a "difficulty in fund raising" rather than concerns about their own ability to produce returns, he said.

But investors are growing increasingly impatient about returns, with the average hedge fund losing money in two of the past four years, so former 'prop' traders have little time to prove themselves and live up to their star status.

"This year will be the moment of truth for hedge funds because a lot of managers have just been scared, protecting capital and missing out on the rally ... A lot of people from prop desks have not been able to transition to the new model well so they are the ones that are most at risk," Kairos' Gesualdi said.

Star bank traders struggle to shine with own funds | Reuters

Reply With Quote
The following user says Thank You to kbit for this post:


futures io > > > > Star bank traders struggle to shine with own funds

Thread Tools Search this Thread
Search this Thread:

Advanced Search

Upcoming Webinars and Events (4:30PM ET unless noted)

Wyckoff Hunting for Great Risk/Reward Ratio w/Gary Fullett

Elite only

Digging into the Details of iSystems w/Stage 5 & iSystems

Jun 5

Similar Threads
Thread Thread Starter Forum Replies Last Post
Va, Fla sue NY bank over pension funds kbit News and Current Events 0 August 11th, 2011 09:57 PM
Goldman Traders Quitting The Bank In Droves kbit News and Current Events 0 July 28th, 2011 10:03 PM
Silver's Shine Is Fading Fast Quick Summary News and Current Events 0 May 3rd, 2011 07:40 PM
Bank- / Institutional Traders max-td Traders Hideout 9 February 26th, 2011 04:47 PM
Major Hedge Funds Cutting Bank of America for Citigroup Quick Summary News and Current Events 0 August 30th, 2010 05:30 PM

All times are GMT -4. The time now is 01:32 AM.

Copyright © 2018 by futures io, s.a., Av Ricardo J. Alfaro, Century Tower, Panama, +507 833-9432,
All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts
Page generated 2018-05-21 in 0.09 seconds with 19 queries on phoenix via your IP