LONDON (Reuters) - British investor Martin Taylor, who closed his $1.5 billion (1.15 billion pounds) hedge fund Nevsky Capital and retired at 46, plans to get back in the market with a fresh perspective and a new firm.
In December 2015, Taylor and co-founder Nick Barnes told investors it was not likely they could reproduce past gains and gave clients their money back.
It was a rare move in the industry and it came after a volatile year in financial markets with falls in oil, commodities and emerging markets.
In a colourful letter to investors, Taylor said Nevsky’s future returns would be hampered by distorted macroeconomic data, the rise of highly unpredictable nationalist governments and algorithmic funds exacerbating volatility in stocks.
But, after nearly three years out, he is launching London-based global long-short equities hedge fund Crake Asset Management in October 2019 to bet on shares and trade underlying commodities.
The strategy mirrors that of Nevsky.
“I did retire and I did say I was never going to come back and I absolutely did mean it at the time, but obviously I’ve now changed my mind,” said Taylor, 49, who has spent the past two years teaching and trading his own money.
“With hindsight, what I realised is I was exhausted. I’d been running a hedge fund manager for more than 15 years,” he told Reuters. “Now, I’ve had a two-and-a-half-year sabbatical, it’s left me refreshed and I want to do this for another 15 years.”
Two investors who declined to be identified told Reuters they welcomed the move.
The rise of algorithmic trading during his break meant that by the time he returns markets may be closer to a tipping point at which it will become easier for a fund like his to make money, he said.
“The increasing dominance of passive investors will eventually make underlying markets more inefficient because there will be fewer and fewer genuinely active managers in the market,” he said.
At his new firm, Taylor will be joined by co-founders Yuri Maslov, a former partner at Nevsky, and Richard Walker, who has previously worked at Societe Generale, according to filings with Britain’s Companies House.
Taylor will be the fund’s chief investment officer and manager while Maslov will be head of research and Walker chief operating officer and co-manager.
Crake will also be adding four to five analysts over the next several months, and aims to have the team in place in April. It will begin accepting outside money from Oct. 1. 2019.
“Having had 2.5 years off, I’m very keen to get back to my first love but I want to do it properly. That is why it won’t be another year until I take money from clients,” he said. “I need to build and train my team first.”
Nevsky Fund Plc’s assets peaked at $3.6 billion and it returned 18.4 percent annually net of fees over 15 years. Its average peer returned 2.5 percent over the same time period, data from industry tracker Hedge Fund Research showed.
Nevsky was launched in 2000 by Taylor, Barnes and Rory Landman, who left the business in 2005 and is now senior bursar at Trinity College, Cambridge.
Taylor is a fan of West Ham United soccer club and he opposed Britain’s departure from the European Union. He donated around 745,000 pounds to Britain’s Labour party between 2012 and 2017, according to Electoral Commission data.
“I’m absolutely going to remain in Britain regardless of what happens with Brexit,” he said.
($1 = 0.7653 pounds)
Editing by Matthew Mpoke Bigg