By Anviksha Patel
Billionaire Michael Platt’s hedge fund BlueCrest Capital has reportedly made double its money from betting against the debt markets, according to the Financial Times.
The hedge fund-turned-family office is apparently up 114% in gains so far this year, the FT has reported , citing a source familiar with BlueCrest’s returns.
British bond trader Michael Platt and American William Reeves set up the hedge fund in 2000 before returning investors’ money in 2015 to become a private investment firm managing billions of pounds between Platt and his partners’ wealth.
Bloomberg has estimated Platt’s wealth at over £10 billion ($11.6 billion), making him the second wealthiest Briton in the list, pipped to the post by billionaire investor James Dyson.
London-headquartered BlueCrest has made gains of as much as 114% this year, the report says, which could become its most profitable year if the trajectory continues, mainly from betting that rising inflation and interest rates would cripple the bond markets.
And so they did as central banks have aggressively hiked up interest rates to control rising inflation.
Bond yields, which move in the opposite direction to prices, on the 10-year Treasury note /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y +1.65% have risen in the year to date from 1.6% to over 3.8% due to the Fed tightening policy. Same with U.K gilt yields /zigman2/quotes/211347177/realtime BX:TMBMKGB-10Y +2.19% , which have soared from under 1% to as much as 4.2% on Thursday.
Another FT source said BlueCrest has profited from betting against emerging markets assets as well.
MarketWatch has approached BlueCrest for comment.
Last December, BlueCrest Capital Management UK was fined over £40 million by U.K regulators for “reckless” conduct in not disclosing conflicts of interest to investors. The year prior, the firm agreed with the Securities and Exchange Commission to return $170 million to former investors due to inadequate disclosures.
While other hedge fund managers have generally had a tumultuous year, those trading bonds and currencies have had a more fruitful time.
For example, London-based Odey Asset Management is up a reported 145% this year from shorting U.K government bonds ahead of the mini-budget that sent the bond markets spiraling.