Millennium Management, one of the biggest hedge fund winners from last year’s coronavirus-driven market turmoil, has further beefed up its risk management by hiring three former Goldman Sachs partners.
New York-based Millennium, which is headed by Izzy Englander and manages more than $48bn in assets, has created new roles to lead the risk management of the firm’s equity, macro and rates, and credit divisions, said people familiar with the firm’s plans.
Large multi-strategy hedge funds such as Millennium and Citadel rely on tough risk management in order to navigate choppy markets such as in spring last year and late January this year. Such firms, which employ tens or even hundreds of teams of portfolio managers trading a wide range of asset classes and strategies, try to run their winning trades to maximise returns, but quickly cut back losing trades before losses spiral.
The firm has hired Paul Russo, who had previously worked as global chief operating officer of Goldman Sachs’s equities franchise until 2018, as head of risk management for equities, the people said. Scott Rofey, who left his role as Goldman Sachs’s co-head of global interest rates product trading in 2019, will become head of rates and macro risk management.
Jeffrey Verschleiser will become head of credit and mortgage-backed security risk management. Verschleiser was previously head of global mortgages, credit and municipals trading at Goldman Sachs until 2019 and has more recently been partner and chief investment officer for credit at private equity firm Reverence Capital Partners.
Millennium declined to comment.
Despite suffering some losses and shutting some trading pods during last spring’s turmoil, Millennium finished last year up around 26 per cent. This year it has gained a further 3 per cent, according to numbers sent to investors.
Other multi-manager firms have also chalked up gains, including Citadel, which gained 24.4 per cent last year and a further 6 per cent this year, and Verition.
Millennium returned some capital to investors last year but its assets under management have still grown from about $37bn at the end of 2019 to more than $48bn, while the number of portfolio manager teams has risen from more than 230 to 265 over that period.
The firm has monitored risk centrally up until now and will continue to do so, although the new hires are part of a move to build standalone risk management in different asset classes as well.
The new hires will report to Millennium’s chief operating officer Ajay Nagpal, co-chief investment officer Bobby Jain and chief executive and co-chief investment officer Englander.
“Risk management is the foundation of our firm,” said Millennium in a note to staff, adding that the appointments had been made “as our business has continued to expand and diversify across strategies, asset classes and geographies”.