LONDON (Reuters) - Chris Rokos, co-founder of hedge fund firm Brevan Howard, is focusing on managing his own fortune, two sources told Reuters, the latest star trader to set up a so-called “family office” rather than work for others amid tighter regulations.
The former Goldman Sachs trader, who left Brevan last summer after the amount of money he managed was cut, has set up the office in the heart of London’s upmarket Mayfair district, close to Berkeley Square, one of the sources said.
While his future plans are still unclear, Rokos is one of a number of star hedge fund managers who has moved away from managing assets for pension funds or wealth managers and rich individuals and switched to running his own wealth.
Billionaire George Soros converted his hedge fund into a family office in 2011, while activist investor Carl Icahn has returned outside investors’ cash and Renaissance Technologies’ Medallion fund has long been shut to outside money.
The trend comes amid tighter regulation of the hedge fund industry, particularly ahead of the introduction of new European hedge fund regulation this year, and growing pressure on traders’ lucrative fees.
While still in its early stages, the move could signal an exodus of talent from the hedge fund industry, traditionally seen as the cutting edge of finance and trading.
“Some people are saying, ‘this (running a hedge fund) isn’t so much fun anymore’,” said one of the sources, adding other managers were leaving or considering leaving the industry.
More conservative investors like pension funds and insurers have recently started to allocate more cash to alternative funds like hedge funds, and a continued ‘brain drain’ could restrict their choices on where to invest.
Oxford University-educated Rokos, 42, is ranked 17th in last year’s Sunday Times Hedge Fund Rich List with an estimated fortune of 230 million pounds.
He was once a star trader on Brevan’s $28 billion Master fund, which has never had a losing year and which made 21 percent in the market turmoil of 2008.
His future plans at the time of his departure were unknown, although two sources at the time told Reuters he was considering launching his own hedge fund.
Launching a family office could still offer a route back into hedge fund management, if he later opens up to external clients. He is likely at the moment to be restricted by a non-compete agreement with his former employer, which is common in such circumstances.
Brevan Howard declined to comment.
Family offices typically manage the assets of a wealthy family, although some can also provide investment management or advice for external clients.
Registration with Britain’s Financial Services Authority (FSA) is not always required - which means less of a regulatory burden than running a hedge fund. Rokos’s new venture is not listed on the FSA register.
“It would depend on the exact nature of the activities being carried on by the family office and the structure of the family office,” an FSA spokesman said.
Rokos’s profile on professional networking site LinkedIn lists him as working at a family office.
One of the sources told Reuters that Rokos has been joined by former Brevan Howard partner Andy French. French also left the firm last year and is now chief operating officer at an unnamed family office, according to her LinkedIn profile.
Neither Rokos nor French responded to a request for comment sent via LinkedIn.
One senior banker told Reuters that Rokos had been meeting prime brokers in London. Prime brokers provide services such as financing and stock lending to hedge funds and other investors.
Brevan Howard is one of the world’s biggest and most successful hedge fund firms with $39 billion in assets under management.
Additional reporting by Tommy Wilkes; Editing by Mark Potter
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