H2O Asset Management, the fixed-income boutique founded by former Amundi UK chief executive Bruno Crastes, is expanding into systematic trading with the acquisition of a small fund that spun out of Millennium Management.
Arctic Blue Capital, a $160m commodity-trading fund, has its origins in a strategy set up for the Canadian pension fund giant Caisse de dépôt et placement du Québec in 2008.
Founded by Jean-Jacques Duhot, who will remain chief investment officer under the H2O deal, it was first sold to Canadian bank CIBC and then to Millennium. It was spun out as an independent firm in 2014 with backing from hedge-fund financing firm Stable Asset Management, which was founded by former FN Rising Star Erik Serrano Berntsen – and opened to external investors for the first time.
H2O will take a “majority stake” in the firm, it announced today, without disclosing the terms of the deal.
The deal represents an expansion into systematic commodity trading for H2O, a global macro manager with a particular expertise in fixed-income strategies. Managing $14.6bn, H2O is part-owned by Natixis Global Asset Management.
Arctic Blue hasn’t had an easy time in 2017, like many commodity funds. Lyxor’s CTA Broad Index, which tracks the performance of so-called Commodity Trading Advisers in aggregate, is showing a drop of 5.2% for the year to the end of June.
Arctic Blue’s main strategy had fallen 6.1% by the end of May 2017, according to performance data from HSBC. The strategy is in positive territory over the longer term, however, with a 4.2% gain for the three years to the end of May.
The commodity fund’s performance is put in the shade by H2O’s flagship strategies. Its Multibonds fund, with €1.1bn under management, has made 20.3% a year, annualised, during the three years to the end of May, according to its most recent factsheet. That compares to a 6.4%-a-year gain for its benchmark index, the JP Morgan Government Bond index.
H2O was named Fixed-Income Boutique of the Year in Financial News’ 2016 Asset Management Awards.
H2O feels the Arctic Blue funds will diversify the firm’s offering. Crastes said in a statement today: “Arctic Blue’s systematic commodity-focused strategies perfectly complement our existing suite of products. In fact, we already share a number of top tier clients and we look forward to increasing this number as a combined entity.”