Marshall Wace, the hedge fund, has tapped a senior executive at private equity backer KKR to lead its US business.
Todd Builione, a partner and global head of private wealth at KKR in New York, will join Marshall Wace as head of North America in September, the two firms said Monday. He will be replaced by Michael Sargent, who will retire in January after nearly two decades with the company.
Founded in 1997 by Paul Marshall and Ian Wace, Marshall Wace has grown to become one of the world’s leading hedge funds. It is best known for its Tops Market Neutral fund, which analyzes the buy and sell recommendations of about 1,000 outside analysts, and its flagship fund, the Eureka fund, which is operated by Marshall. About half of his assets are in systematic strategies that use computer algorithms.
In September 2015, KKR bought a 24.9 percent stake in Marshall Wace, which Builione helped manage. He paid for the stake with 7.4 million shares, then worth $147 million, and cash from his balance sheet. Since then, KKR has increased its share to 39.9 percent. During that roughly eight-year period, Marshall Wace’s assets under management nearly tripled, from $22 billion to $62 billion.
The growth of groups like Marshall Wace shows that the hedge fund industry is increasingly concentrated in a handful of large, diversified businesses. The rising costs of technological and regulatory investment have raised barriers to entry for new players.
Builione is already a board member of Marshall Wace through its strategic partnership with KKR. Before joining the alternative giant a decade ago, he led the hedge fund business at Highbridge Capital Management and worked at Goldman Sachs. During a decade at KKR, Builione played a significant role in building up the group’s credit business, which currently accounts for 40 percent of the total assets.
“We look forward to working together [Todd] in his new role and deepening the strategic partnership between our companies,” said Scott Nuttall, co-CEO of KKR.
The change in management of Marshall Wace’s North American business does not result in a change in its distribution strategy. The majority of its clients are institutional investors, and the company does not plan to go after the residential market, said a person familiar with the situation.
Most of your funds are locked or partially locked to new money. About three-fifths of hedge fund assets come from US investors, according to data provider Preqin.
Eureka’s performance this year is unchanged, but investors say it has averaged 8.3 percent annualized gains since its launch nearly two decades ago. The Tops Market Neutral fund is up 2.88 percent this year and has averaged an annual gain of 9.31 percent since November 2007.
KKR runs more than $500 billion in corporate private equity investments and strategies focused on credit, infrastructure and real estate.