Marshall Wace partners to share £720mn profits

Marshall Wace, one of the world’s biggest hedge fund firms, is sharing profits of more than £720mn among its partners after its computer-driven trading systems made strong gains during a turbulent period for global financial markets.

The London-based firm, which was founded by Sir Paul Marshall and Ian Wace in 1997 and manages around $60bn in client assets, made the profits as its turnover jumped 62 per cent to more than £1.5bn, the firm said in a filing for its results for the year to February.

The news comes after Sir Christopher Hohn, the billionaire founder of hedge fund firm TCI Fund Management, paid a dividend of $690mn to a company he personally controls for the same period, up from $152mn the previous year.

The bumper payouts come during a highly mixed period for the $3.8tn hedge fund industry.

While some managers have profited handsomely from betting on a huge sell-off in government bonds or the start of a bear market in stocks, many traders were caught out when the high-growth technology bets they favoured during the seemingly never-ending bull market were hard hit by steep rises in inflation and interest rates.

Chase Coleman’s Tiger Global, once one of the world’s top-performing hedge funds, was down more than 50 per cent this year to October. In contrast, Crispin Odey has gained around 150 per cent in his Odey European fund, helped by bets against bonds, while Haidar Capital has gained more than 250 per cent.

Equity hedge funds on average are down 11.3 per cent this year to the end of October, while hedge funds on average are down 4.5 per cent, according to data group HFR.

Marshall Wace made strong gains in its computer-driven funds, as some quant managers were able to profit by buying up stocks they considered to have been oversold during the bear market.

Its Tops Market Neutral fund, which analyses buy and sell recommendations from about 1,000 external analysts, gained 23.7 per cent last year and is up more than 17 per cent this year, according to numbers sent to investors and seen by the Financial Times.

The firm’s flagship $17bn Eureka fund, run by Marshall, gained 10.8 per cent last year and is up 4.4 per cent this year.

The firm’s profits were shared among 23 partners, which included Marshall and Wace as well as parent company Marshall Wace Asset Management.

Hohn’s TCI, meanwhile, which tends to bet on rising rather than falling stock prices and which has benefited from the strong bull market seen during the coronavirus pandemic, posted a 160 per cent rise in profits to $714mn, lifted by performance fees.

Most of the dividend paid to Hohn’s company was subsequently invested into TCI’s hedge fund.

So far this year the fund is down around 12 per cent, according to an investor.

Marshall Wace and TCI declined to comment.

laurence.fletcher@ft.com