NEWS UPDATE
B U Y- S I D E FIXED INCOME
Louis Bacon shuts Moore
Capital hedge funds amid
challenging business model Citi invests in credit
trading platform
Trumid
Intense competition for trading talent and
client pressure on fees sees industry veter-
an Louis Bacon shut three flagship funds. Trumid has won investment from Citi
via its Spread Products Investment
Technologies (SPRINT) program.
V
eteran hedge fund manager and trader Louis Bacon will
shut his New York-based hedge funds at Moore Capital
Management to external investors amid continued pressure
on client fees and returns.
According to a letter to investors seen by The TRADE,
Bacon has decided to return client assets and funding
for three flagship funds and consolidate them into one
proprietary fund. The consolidated fund will be managed
with less participation from Bacon, the letter said.
“Although this has not been an easy decision given the
loyalty of Moore’s macro investors over the decades to
whom I am forever grateful, it will allow me the space
to step away for significant periods of time when my
other interests abound without the ongoing weight and
responsibility of looking after public investors’ capital on a
continual basis,” Bacon said.
Upon returning capital to investors early next year, the
three funds due to close at Moore Capital will have returned
around $19 billion in profits, although the investment firm’s
assets under management have reportedly declined to
around $8.9 billion over the past 10 years.
The shutdown is reflective of the difficult operating
environment for active investment funds, with Bacon citing
“intense competition for trading talent” alongside “client
pressure on fees” leading to a challenging business model
for multi-manager funds. He also recognised “disappointing
results” of the funds in question of the last few years.
“Our move to a proprietary funded asset base will allow us
to be more opportunistic in acquiring investment talent and
more competitive with those whom have a ‘pass through’
structure,” he stated.
Bacon founded Moore Capital Management in 1989 and
gained notoriety for producing a massive 86% returns
during his first year of operation when he shorted the
Japanese Nikkei index after correctly predicting the impact
of the Gulf War on global oil prices.
E
lectronic credit trading platform Trumid has
received investment from Citigroup, as the US
investment bank seeks to leverage the growth of
algorithmic and portfolio trading in the credit space.
Citi has backed Trumid via its Spread Products
Investment Technologies program within the Citi
Markets FinTech Investments Unit. The bank will
appoint a member to Trumid’s trading advisory
committee to offer insights on product develop-
ment and market structure as part of the invest-
ment.
New York-based Trumid provides a trading plat-
form aimed at increasing the volume of corporate
bonds that are traded electronically. Focusing on
block trades, Trumid deploys a data-driven platform
with various trading protocols, which can be inte-
grated with other systems and scaled into other
products.
“We are excited about the direction that Trumid
has taken in regard to disclosed client-to-deal-
er connectivity. The Attributed Trading protocol
creates technological efficiencies and transparency
in the way we distribute liquidity to our clients,
and we intend for it to be an integrated part of our
client workflow,” said Derek Hafer, head of North
American IG & macro credit trading at Citi.
Citi added that it has long been an advocate
of trading and technological advances in credit
markets, including the recent surge in portfolio
and algorithmic trading in fixed income. Portfolio
trading allows traders to execute a basket of bonds
in a single transaction for increased efficiency.
“We are extremely excited about adding a market
leader like Citi to our already vibrant network and
working closely with all of our clients to continue
delivering innovative and thoughtful products,”
Ronnie Mateo, CEO of Trumid, concluded.
Issue 62 // TheTradeNews.com // 13