By Simon Jessop
LONDON (Reuters) - BlueCrest Capital Management, the $8 billion (£5.3 billion) hedge fund firm founded by billionaire Michael Platt, is returning all the cash provided by outside investors amid pressure on fees, rising costs and a lacklustre performance.
The decision, which follows an exodus of capital in recent years and disappointing returns relative to some rivals, is a shock move for one of the world's best-known investment managers at a time when pension funds and others are looking to put more money into the $3 trillion hedge fund industry.
After external clients have been given their money back, most of it by the end of the first quarter in 2016, the firm would still be left with several billion dollars in assets, a spokesman said. The firm ran more than $30 billion at its peak.
"We will be stronger and more flexible under our new business model, and see exciting opportunities to grow significantly in terms of numbers of trading teams and assets under management," Platt said.
Switzerland-based Platt, best known for his bets on macroeconomic trends and who made $22 billion for investors after setting up the firm 15 years ago, said the new model would boost profitability and allow the firm to pay bigger salaries and bonuses to attract top trading talent.
Anthony Lawler, head of portfolio management at hedge fund investor GAM said the move was "a bit surprising, in that he's still running a sizeable business, but he's had a large amount of redemptions from having dull performance, arguably since 2010 ... so it's quite a rational decision for him to focus only on managing his own money without investor constraints."
BlueCrest employs more than 250 investment professionals trading fixed income, currencies, emerging markets, credit and equities out of nine offices. All would remain open after the move, BlueCrest said.
BlueCrest said its partner fund BSMA would continue to hold assets managed in the fixed income, currency and credit trading strategies, and the BlueCrest Equity Strategies Fund and the BlueCrest Emerging Markets Fund would be retained.
All other funds, including its BlueCrest Capital International and AllBlue Fund, are expected to close during 2016, it said. AllBlue was up 3.7 percent in the year to Nov. 20, a source familiar with the matter said.
(Additional reporting by Sinead Cruise; Editing by Louise Heavens and Mark Potter)