Brevan Howard expands external allocations to equities

Brevan Howard will allocate capital to external equities-focused hedge funds and has hired former UBS executives Michael Dwier and Adolfo Oliete to lead the programme. Dwier will source and deploy capital to US equity managers. Oliete will identify long-short equity teams in Europe and Asia. The allocations will be managed through separately managed accounts and will expand an external-allocation component of the firm’s Alpha Strategies multi-strategy fund.

The firm has previously channelled external capital mainly into macro strategies, including allocations to Key Square Group and ARP Global Capital. Brevan Howard manages more than $34 billion in assets and declined to comment.

Industry estimates show more than 70% of multi-manager platforms now allocate capital externally, up from just over half in 2022. Firms use external allocations to scale exposure and to access specialised trading teams as internal platforms grow in size and complexity.

Equities have been a key contributor to Brevan Howard’s recent performance, offsetting weaker results in rates and foreign-exchange trading. The firm has been expanding its internal equities capability, adding sector specialist teams under strategist Abhijit Chakrabortti and maintaining active stock exposure through traders including Fash Golchin. The new external equities programme will bring third-party equity specialists operating in different markets and strategies into the firm’s multi-strategy portfolio.

Other large multi-strategy platforms with external-allocation programmes include Millennium Management and Qube Research & Technologies. Citadel has provided selective backing to external managers, most recently supporting Toms Capital Investment Management.

Operating the allocations via separately managed accounts will allow Brevan Howard to hold external portfolios with direct oversight. Industry participants note such arrangements can offer greater flexibility in risk controls and increased transparency compared with pooled fund investments.