Alan Howard may feel entitled to take a bow. The enduring macro trader, however, is not bowing out.
Brevan Howard Asset Management announced Tuesday that Howard, 56, co-founder and publicity-shy figurehead, is giving up his CEO position later this year, to concentrate on trading his own portfolio at the firm.
Replacing him as CEO is Aron Landy, since 2003 the firm’s chief risk officer, a key role at a firm that earned its stripes steering its traders clear of the marketplace landmines that have blown up rivals over the years.
“My ambition is to continue to develop the firm,” said Landy in a telephone interview. “There is a mission. There is a plan.”
The long-term goals, he said, include “increasing the number of products and funds” that Brevan Howard markets. The future offerings, Landy added, are likely to be focused across different geographies, and will be in “a wide variety of investment styles.”
Landy will be replaced as chief risk officer by his deputy, Alexandre Assouline.
The transition comes at a pivotal moment for Brevan Howard. Last year represented a reset at the firm: Performance improved and assets ticked up following a stretch of downbeat returns and massive asset flight.
During the financial crisis, the flagship Brevan Howard Master Fund skyrocketed, garnering a 20.4 percent return in 2008. Investors piled into the firm, with assets surpassing $40 billion by 2013.
By then, however, quantitative easing, surging U.S. stock prices, and ultra low or negative interest rates were kicking in. The Master Fund sputtered, generating paltry, single-digit returns or even losing money over a four-year stretch. Assets bolted from Brevan Howard, tumbling to a low of $6.3 billion in 2018.
Brevan Howard responded by shuttering non-core funds, firing support staff, and easing out traders.
By 2017 the firm was battling back, starting the roll out of more than a half dozen new funds, including single manager portfolios run by stars like Alfredo Saitta, a well-known rates and forex trader. It launched other strategies and new, investor-friendly fee structures.
By year-end 2018, the new direction appeared to be gaining traction, with the Brevan Howard Master fund returning 14.2 percent, according to documents.
Alan Howard’s own fund, Brevan Howard AH Master Fund, launched in 2017, generated a 30 percent gain last year, according to media reports.
That Alan Howard-run fund, a concentrated, high-volatility portfolio with limited investors, has swung between losses and gains in 2019, according to a person familiar with it, and finished the third quarter with a mid-single digit loss for 2019. Brevan Howard declined to comment on the record or provide updated return figures.
Nevertheless, Landy said the firm has raised $2 billion this year, half from returning investors, bringing total assets under management to $7.5 billion.
As for Brevan Howard’s CEO transition, it may not amount to much of a change for the firm.
After all, Alan Howard retains majority control. And for the past decade and a half, Landy has monitored and interrogated his boss, along with other Brevan Howard traders, about their market positions and exposures, demanding portfolio adjustments to dampen risk when he deemed it necessary.
So there will likely not be an ego clash on that count. “He does his thing and I do mine,” Landy said.
And though the Cambridge University engineering PhD has toiled as chief risk honcho at Brevan Howard since joining, he brings plenty of trading credibility to the job.
Landy worked early in his career as a trader at Paribas and bought and sold swaps and options at Tokai Bank Europe, where he originally met Alan Howard. Later, he traded fixed income and options at Optimum Asset Management. And just before joining Brevan Howard, Landy managed a market-neutral equity fund at Millennium Global Investments from 2001 to 2003.
Today, Brevan Howard currently oversees 14 separate funds, Landy said. He is upbeat about their outlook, as well as that of the firm, based on three developments.
First, the trading environment has turned positive for the macro business, with rising volatility in the forex and interest rate markets in particular. In addition to recent European Central Bank moves, there is the U.S.-China trade war, tensions in the Persian Gulf, and Brexit.
“There are plenty of things going on in the macro world,” Landy said.
Second, Landy said Brevan Howard is attracting talent and its funds are performing well in this year’s unfolding market environment.
Though Brevan Howard won’t disclose year-to-date performance numbers on the record, documents show that the Brevan Howard Master Fund returned 7.5 percent year-to-date through September; the Brevan Howard AS Macro Master Fund, 8.75 percent; the Brevan Howard MB Macro Master Fund, 8.6 percent; the Brevan Howard FG Macro Master Fund, 0.56 percent; and the Brevan Howard Alpha Strategies Master Fund, 11.29 percent.
By contrast, the HFRI Macro (Total) Index returned 6.48 percent for the first three quarters of 2019.
Third, Landry says the traders that Brevan Howard attracts, and there are about 40 of them currently, continue to enthuse over the firm’s technological edge.
“We are consistently told that our technology is the best on the street and that it is part of the reason portfolio managers want to come here,” he said. “The technology and trading platform really helps them make money.”
That, after all, is the purpose of the Brevan Howard venture going forward.
