New Jersey Redeems From BlueCrest Citing “Underperformance”

New Jersey’s public pension plan is seeking to redeem its full interest in BlueCrest Capital International because it has “underperformed expectations”.

The New Jersey Division of Disinvestment is also seeking to redeem its full $148.6 million interest in Regiment Capital Fund as of July 1.

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New Jersey pulls out after adding $100 million last year

New Jersey originally invested $200 million with BlueCrest in 2012 and enhanced that by $100 million last year as part of a broader program to reduce risk by expanding relationships with firms that had performed well during periods of turmoil.

However, the State Investment Council said Wednesday that it submitted to redeem its full interest in BlueCrest Capital International, which makes bets on foreign exchange, fixed income and global equities.

Chris McDonough, director of the state investment said at a meeting in Trenton that the redemption will be for June 30, after performance has been  “disappointing”.

BlueCrest Capital International Ltd is managed by BlueCrest Capital Management. BlueCrest was among the global hedge fund companies blindsided earlier this year when the Swiss National Bank removed the currency peg between the Swiss Franc and the euro.

As reported by ValueWalk, the fallout from the Swiss National Bank unpegging from the euro and soaring over 25% overnight back in January continued to mount, with several forex trading firms and hedge funds losing substantial sums.

BlueCrest faced a slew of redemptions

Following the SNB’s unpegging from the euro, the $4.9 billion BlueCrest International lost nearly 6% in January and has since faced a slew of redemptions, reportedly totaling over $2.7 billion.

BlueCrest’s Macro fund, however, logged its best monthly return in five years in April, gaining 2.8%.

BlueCrest was founded by billionaire British hedge fund manager Michael Platt. the firm now manages approximately $12 billion, down sharply from a 2013 peak of $37 billion following redemptions and team spinouts.

The hedge fund has had to grapple with several challenges in the recent past. BlueCrest dismissed a money manager named Nicholas O’Grady late last year after claiming he improperly divulged information about his trading to an employee at another firm.

Last February, hedge fund manager Meredith Whitney pointed out problems at BlueCrest as it had lost over half of its assets under management, which may have resulted in threats directed at the fund board members. The fund also lost its top algorithmic trader, Leda Brag, who launched her own managed futures offering.

Despite its intentions to redeem fully from BlueCrest, the New Jersey Division of Investment committed up to $1.175 billion of the $79.2 billion New Jersey Pension Fund to hedge fund investments. Documents submitted Wednesday by the division at a meeting of the State Investment Council revealed the division will make up to $900 million in commitments to existing separate accounts and two new commingled funds managed by Och-Ziff Capital Management Group.

Moreover, the division disclosed Wednesday it will make commitments to a pair of new commingled funds – $100 million to OZ Energy Partners and $100 million to Och-Ziff Real Estate Credit Fund.