Amid weeks of rumours that the firm was making personnel changes and returning capital to its investors, officials at the hedge fund Brevan Howard Asset Management have opted to close an equity strategies fund in the wake of its manager’s departure, say people familiar with the plans.
Fabrizio Gallo, who ran the roughly $600 million Brevan Howard Equity Strategies Fund for a year and a half, recently left the fund company to join Bank of America, where he’ll be co-head of global equities, according to these people and an internal announcement circulated at the bank shortly after noon Thursday.
Gallo “brings deep and broad trading experience” and will be “a valuable addition to our leadership team,” wrote Bank of America capital-markets head Tom Montag in the internal memo. Gallo, who will join the bank late this summer, is the latest in a string of senior hires in Bank of America’s sales and trading division. A Brevan official said the firm was “looking forward” to working with Gallo in his new role.
The Geneva-based Brevan, which at $32 billion under management is one of Europe’s largest hedge-fund companies, has been bedeviled by tepid returns this year and last, and has faced a series of redemptions from investors in recent months, say people familiar with the matter.
Still, the departed investors have been replaced, one of these people said, and the firm’s master fund remains one of the world’s biggest, with $24 billion under management.
Given the redemptions and rumours of a senior-level departure, investors and traders had been chattering of late about the possibility of Brevan returning capital to investors. But other than the return of the money in the Equity Strategies fund, which will be wound down in the coming weeks, there are no current plans for lowering capital levels, the person familiar with the matter said—unless the master fund were to crest the $25 billion mark, at which point it would be capped.
The equity fund Gallo managed was launched about five years ago and performed solidly, this person said, but was never particularly resonant with investors. So far this year, its performance had been flat, the person added.