* Man to take share of revenues from fund
* Bond arbitrage less crowded after credit crisis
* Talented managers still setting up on their own
LONDON, July 21 (Reuters) - A portfolio run by Man Group (EMG.L), the world’s biggest listed hedge fund firm, has invested $50 million in a new start-up fund run by three former Brevan Howard traders.
Man’s RMF Global Emerging Managers strategy has put money with 5:15 Capital Management, a Greenwich, Connecticut-based fixed income arbitrage firm set up this month and named after a song from The Who’s 1973 album Quadrophenia.
Man will take a share of revenue from the firm, whose founders also worked together at Greenwich Capital Markets.
The investment comes after a period of hefty outflows from the battered hedge fund industry. Between October and June, investors have pulled around $300 million from hedge funds, although the pace is now slowing. Hans Hurschler, head of hedge fund ventures at Man, told Reuters the credit crisis has cut the number of investors trying to make money out of the type of arbitrage 5:15 focuses on.
“This fund is very liquid and the opportunity set is very (big) with the sheer amount of government bonds issued,” he said.
“There are not so many people doing it right now. Some of the hedge funds and prop desks that were doing it have gone out of business.”
Man normally makes four or five such investments a year, each with around $50 million.
Despite last year’s record poor performance from hedge funds and heavy outflows from investors, Hurschler said talented managers are still setting up their own boutiques.
"We see a lot of talent in the market... There's considerable business risk (in a start-up) but investors understand who makes the money in a fund (and may therefore follow managers to a start-up)." (To read the Reuters Hedge Fund Blog click on blogs.reuters.com/hedgehub; for the Global Investing Blog click here) (Reporting by Laurence Fletcher)