Brevan Howard’s Crypto Hedge Fund Becomes the Largest Launch in History

Brevan Howard Asset Management has finished the largest crypto hedge fund launch to date.

Alan Howard

According to four sources with knowledge of the matter, the firm’s flagship digital assets-focused vehicle raised more than $1 billion from institutional investors, with the vast majority of the massive haul timed to coincide with the fund’s launch earlier this year.

The fundraising by BH Digital, the unit in charge of Brevan’s extensive crypto trades, will rank annually among the top tiers of even conventional hedge fund strategies. According to one source, it’s an “absolutely massive” result by digital asset standards, given that overall market capitalizations are much lower.

Furthermore, early performance has surpassed the competition, according to another source.

Brevan Howard raised more than $1 billion for its flagship crypto vehicle

Despite the one-two punch of the implosion of Terra stablecoin UST and the insolvency of crypto lenders such as Celsius and Voyager, locking price action and liquidity into corresponding death spirals, the commingled vehicle, Brevan Howard Digital Asset Multi-Strategy Fund, lost only 4% to 5% from its inception through the end of June, according to the source.

The flagship uses a multi-manager and multi-strategy approach to invest limited-partner capital in venture capital-style plays as well as liquid cryptocurrencies. The number of employees running BH Digital’s operations has increased from 25 in January to over 60.

Teams of portfolio managers are organized into so-called “pods” that include supporting analysts and engineers to implement strategies, such as quantitative trades and relative-value plays. More than 20 external blockchain engineers are currently employed full-time by the division on a retainer.

BH Digital hasn’t fully deployed its capital

It is by far the biggest investment in cryptocurrencies made by an asset manager in traditional finance. The $23 billion total market capitalization of the global macro-focused Brevan is spread across numerous asset classes.

Even though Howard has stepped back from day-to-day oversight, the scope of the pricey nascent operation reflects founder Alan Howard’s longstanding and deeply rooted bullishness on digital assets. His family office has made significant investments in a number of now-famous crypto startups, including Polygon.

According to crypto-focused business development executives, the evergreen fund will have an initial capacity of up to $1.5 billion. However, that ceiling is expected to rise soon as the unit adds investment professionals and introduces new sets of strategies to the market.

Brevan Howard Digital Asset Multi-Strategy Fund continues to accept external capital with a minimum check of $5 million. Its limited partners include some of the world’s largest and most sophisticated hedge fund investors, as well as entities that have traditionally backed only traditional financiers.

BH Digital hasn’t fully deployed its capital, which may explain its relatively strong performance, but its portfolio managers have clearly put significant funds to work.